Stocks finish higher after Fed releases its minutes


POSTED: Wednesday, January 07, 2009

NEW YORK » Wall Street brushed off more bad economic news yesterday and finished with a rally that left stocks at their highest levels in two months.

Stocks finished with moderate advances after stumbling in the early going because of data that gave mixed readings on the service sector, factory orders and pending home sales.

While investors expected the data would show further deterioration, they were hoping the pace of the declines would slow. The market is eager for signs that the U.S. recession will end this year.

Stocks recovered in midafternoon trading after the Federal Reserve released the minutes from its December meeting, providing insight into the central bank's historic decision to ratchet down its key interest rate to near zero.

Federal Reserve officials feared the economy would be stuck in a painful rut for some time. Fed Chairman Ben Ber-nanke and his colleagues slashed the central bank's target lending rate to help spur the economy.

The Fed, which this week began buying mortgage-backed securities, also said at the time it was considering acquiring other types of securities, such as Treasurys.

The Dow Jones industrial average rose 62.21, or 0.69 percent, to 9,015.10.

Broader stock indicators showed steeper advances. The Standard & Poor's 500 index rose 7.25, or 0.78 percent, to 934.70, while the Nasdaq composite index advanced 24.35, or 1.50 percent, to 1,652.38.

The Russell 2000 index of smaller companies rose 94.16, or 1.01 percent, to 514.71.

Earlier yesterday, the National Association of Realtors said that pending home sales fell to the lowest level on record in November.