U.S. Indexes Surge to Records as Treasuries Fall on Fed Tapering

Bloomberg (19/12) -- U.S. stocks surged, sending benchmark indexes to record highs, while Treasuries fell as the Federal Reserve expressed enough confidence in the labor market to taper stimulus while still promising to hold interest rates close to zero. Commodities and the dollar advanced.

The Dow Jones Industrial Average soared 292.71 points to 16,167.97 and the Standard & Poor’s 500 Index rose 1.7 percent to 1,810.65 by 4:12 p.m. in New York, its biggest gain in two months. The benchmark gauge of U.S. equity volatility dropped the most since October. Ten-year Treasury yields climbed five basis points to 2.89 percent. The greenback soared to a five-year high versus the yen and climbed versus most major peers. Gasoline, silver and coffee led gains in commodities. The Fed announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus put in place by Chairman Ben S. Bernanke to help the economy recover from the worst recession since the 1930s. Fed officials predicted the unemployment rate will fall to as low as 6.3 percent by the end of next year, compared with a September projection of 6.4 percent to 6.8 percent.