Stocks climbed in a seesaw session on Wall Street today, rising after the president of the Philadelphia Federal Reserve signalled the central bank could change its interest rate policy in the aftermath of Hurricane Katrina.
Stocks moved higher after Philadelphia Fed President Anthony Santomero called increasing oil prices a “tax” and told CNBC it was too early to say whether the Fed would change its interest rate policy in light of the hurricane’s wreckage.
Many traders took the comment as a signal that the Fed’s year-plus streak of rate hikes might end sooner than expected.
“The president of the Philly Fed is saying the Fed has to adapt to changing circumstances,” said Todd Leone, managing director of equity trading at SG Cowen Securities.
“With what’s going on in New Orleans, I don’t think the Fed can raise rates.”
Bonds, which had soared all day, rose even higher after Santomero’s comments.
Falling oil prices also helped stocks. After closing at a record high of US$69.81 (€56.56) on Tuesday, oil settled today at US$68.94 (€55.85), down 32 cents on the New York Mercantile Exchange.
The Dow Jones industrial average rose 68.78, or 0.66%, to 10,481.60.
Broader stock indicators were slightly higher. The Standard & Poor’s 500 index rose 11.92, or 0.99%, to 1,220.33, and the Nasdaq composite index rose 22.33, or 1.05%, to 2,152.09.