Dow jumps 288 points in best day of the year

David Craig, USA TODAY5:49 p.m. EST December 17, 2014

The Federal Reserve modified its 'considerable time' language in its statement, saying short-term interest rates will remain low and that it can be patient when considering the timing of rate hikes. Newslook


(Photo: Richard Drew, AP)

NEW YORK — Wall Street cheered as the Federal Reserve used a new word — "patient" — to basically let the market know that it isn't in a rush to hike short-term rates next year.

In its final policy statement of the year, the Fed said that it "can be patient in beginning to normalize the stance of monetary policy."

"Patient" is a code word, of sorts, to telegraph to markets that the Fed is on course to raise rates for the first time since 2006 -- but likely won't hike short-term rates any earlier than the middle of next year, as Wall Street now forecasts, and could even wait until later next year.

Stocks shot up on the news. The Dow Jones industrial average, which was up earlier in the session amid signs of stabilization in the oil market and a rebound in the Russian ruble, shot up even more after the Fed statement was released at 2 p.m. ET. The Dow jumped as high as 320 points before closing up 288 points, or 1.7%, to 17,356.87.

The Standard & Poor's 500 index jumped 40.15 points, or 2%, to 2012.89. It was the Dow and S&P 500's best point gain of the year and ended a three-day losing streak for the major indexes.

The Nasdaq composite index added 96.48 point, or 2.1%, to 4644.31.

Stocks already had been rallying ahead of the Fed announcement as a stronger Russian ruble and a rebound in oil prices encouraged bargain-hunters to come in and take advantage of opportunities created in a sell-off that had dropped the U.S. stock market 5% from its record highs earlier this month.

In other economic news: Plunging prices at the gas pump pulled down U.S. consumer prices by the largest amount in six years last month, the Labor Department said Wednesday. The consumer price index fell 0.3% as gasoline prices fell lower for the fifth straight month.

Overseas, European stocks were mixed: Britain's FTSE rose 0.1% to 6336.48 and Germany's DAX index fell 0.2% to 9544.43.

In Asia, Japan's Nikkei 225 index gained 0.4% to 16,819.73, while Hong Kong's Hang Seng index fell 0.4% to 22,585.84.The Shanghai composite gained 1.3% to 3061.02.

Russia's embattled ruble is stabilizing at about 62 to one U.S. dollar, an increase for the day of more than 8%.

Deputy Finance Minister Alexei Moiseyev was quoted by the Interfax news agency Wednesday as saying that it is going to sell foreign currency from its treasury accounts "as much as necessary and as long as necessary." The hope is that it would relieve the pressure on the ruble, particularly against the dollar.

The currency lost over 19% of its value this week as oil prices — the country's main source of revenue — continued to slide and Tuesday's massive interest rate hike by the Russian Central Bank failed to halt its steady fall.

http://www.usatoday.com/story/money/...sday/20527269/