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Stocks jump on plan to boost economy


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POSTED: Thursday, March 19, 2009

NEW YORK » The Federal Reserve kept Wall Street's big rally alive - and gave the Treasury market a huge boost as well.

Both markets surged yesterday after the Fed said it would pump more than $1 trillion into the economy to help revive the housing market. The plan includes buying up to $300 billion of long-term government bonds during the next six months.

Investors expect the move to drive down borrowing costs for everything from mortgages to credit cards. The Dow Jones industrial average reversed early losses to end up 91 points and the yield on the benchmark 10-year Treasury note plunged, indicating strong demand.

The Fed's announcement accompanied its decision to keep interest rates at historically low levels. Chairman Ben Bernanke and other officials have said they would deploy whatever tools necessary to revive the economy.

The Dow Jones industrial average rose 90.88, or 1.2 percent, to 7,486.58.

Broader stock indicators also jumped. The Standard & Poor's 500 index added 16.23, or 2.1 percent, to 794.35, and the Nasdaq composite index rose 29.11, or 2 percent, to 1,491.22.

The Russell 2000 index of smaller companies jumped 14.04, or 3.5 percent, to 417.63.

The dollar fell against other major currencies. Gold prices also slid as demand for safe haven holdings fell.

Light, sweet crude fell $1.02 to $48.14 per barrel on the New York Mercantile Exchange.