U.S. stocks advanced, erasing early losses, as rising oil prices spurred a rally in energy shares and China’s central bank reportedly started providing about $81 billion in loans to its biggest banks.
The S&P 500 added 0.8 percent to 1,998.99 at 4 p.m. in New York, recovering from a morning loss of 0.3 percent. The Dow Jones Industrial Average climbed 100.83 points, or 0.6 percent, to 17,131.97. The Nasdaq Composite Index increased 0.8 percent. Trading of S&P 500 companies was 15 percent higher than the 30-day average as investors awaited a Federal Reserve policy statement and press conference Wednesday.
“The market sees the letters ’Q’ and ’E’ combined with China and it’s Happy New Year to the money printers and that’s what the jump is, they want that game to continue,” Joe Saluzzi, co-head of equity trading at Chatham, New Jersey-based Themis Trading LLC, said. “They may not know how or why it’s happening. But get some new QE money in there and that’s how the market reacts.”
Stocks extended gains as Sina.com reported that China’s central bank is starting a 500 billion yuan ($81.4 billion) standing lending-facility to the nation’s five biggest banks. The report cited Guotai Junan banking analyst Qiu Guanhua at Guotai Junan Securities Co.
Fed officials, who start a two-day meeting today, are considering how much progress toward their goals of full employment and stable inflation would be needed to prompt the first rate increase since 2006. They will outline their outlook for the economy in quarterly projections for growth, unemployment, inflation and the benchmark federal funds rate.
Chair Janet Yellen will hold a press conference after the policy announcement on Wednesday. The S&P 500 had dropped 1.2 percent from its record earlier this month through yesterday.
“At this point I think anything that comes out of the FOMC meeting can’t be negative, the market’s already expecting some sort of rate change on behalf of the committee certainly by the end of spring and if that’s the case, then economic conditions are supportive and that’s good for the market,” Ron Anari, the Jersey City-based senior vice president of trading at ICAP PLC, said via phone.
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