Dow Closes Up 220 After Fed 'Ship' Comes In - TheStreet

Dow Closes Up 220 After Fed 'Ship' Comes In

Despite a rise in intial jobless claims, stocks rose nearly 2% a day after the Fed's 'QE2' sailed in. Gregg Greenberg has The Real Story.
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NEW YORK (

TheStreet

) -- Stocks finished 2% higher on Thursday, spurred by the

Federal Reserve's

plan to strengthen the U.S. economy by buying $600 billion of Treasury securities.

The

Dow Jones Industrial Average

closed 220 points or 1.9% higher at 11,434 after making a fresh intraday high for the year at 11,472 earlier in the session. The Dow's close was at its highest since Sept. 8, 2008, before Lehman Brothers collapsed. The

S&P 500

surged 23 points or 1.9% to its highest level this year at 1221 and the

Nasdaq

gained 37 points, or 1.5% to 2577.

Basic materials, capital goods and energy sectors saw the biggest gains with

JPMorgan Chase

(JPM) - Get Report

,

Bank of America

(BAC) - Get Report

and

American Express

(AXP) - Get Report

trading at the top of the Dow.

Pfizer

(PFE) - Get Report

was the only component to trade in negative territory.

AmericanExpress showed strong gains, up 3.3% at $43.44 on news that it agreed to acquire

Accertify

, an online fraud prevention firm, for $150 million.

News that the Fed will buy $600 billion of longer-term Treasury securities by the end of the second quarter of 2011 to reduce long-term interest rates weakened the U.S. dollar and boosted commodities.

Gold prices soared more than 3% higher, adding $45.60 to settle at $1,383.10 an ounce and the December crude oil contract added $1.80, to settle at $86.49 a barrel.

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The U.S. dollar traded 0.5% lower against a basket of currencies and the benchmark 10-year Treasury note strengthened 26/32, diluting the yield to 2.487%.

"Today's action is driven more by fear of more modest returns from the fixed income market," said Lawrence Creatura of Federated Investors. "Investors are reallocating from the bond side to the equities side. It is not so much because they are euphoric about equities as it is because they are less confident about bonds."

"The conventional wisdom is buy on the rumor, sell on the news and the market did the opposite," said Benny Lorenzo of Kaufman Bros. earlier this morning. "It just kept going up and up, and I think it will keep going up because third-quarter earnings have been very, very good," he said, adding that the macroeconomic concerns might abate as the political environment for business becomes more friendly.

Global markets also gained on the news. Hong Kong's Hang Seng jumped 1.6% and Japan's Nikkei soared by 2.2%. The FTSE in London increased 2% and the DAX in Frankfurt added 1.8%.

Also on Thursday, the

Bank of England

voted against expanding its bond-purchase program and left rates unchanged. The

European Central Bank

also opted to keep its main refinancing rate unchanged at 1%, as expected.

The Fed's plan comes as the number of jobless Americans continues to mount. The number of Americans

filing jobless claims for the first time rose by 20,000 to 457,000 in the week ended Oct. 30, twice as much as economists expected. Companies have been doing more with fewer workers, causing productivity to rise to an annual rate of 1.9% last quarter after declining 1.8% in the second quarter, the Labor Department said.

In a sign that the White House is willing to compromise on issues after Republicans took the House in the midterm elections,

President Barack Obama invited leaders from the Democratic and Republican parties to join him in a discussion on tax cuts Nov. 18.

After the bell,

Kraft Foods

(KFT)

reported a 22% drop in profit driven by higher ad spending. The results were in line with estimates. Shares were up modestly in aftermarket trading after closing 0.7% higher to $31.79.

Starbucks

(SBUX) - Get Report

surged 2.8% in extended trading

after it beat estimates on both the top line and bottom line.

Shares across the retail sector lacked direction following

mixedOctober same-store sales results. The

Retail HOLDRs ETF

(RTH) - Get Report

gained 1.9% to $102.95.

Gap

(GPS) - Get Report

shares rose 6.1% to$20.43 after it reported a preliminary profit of 47 cents to 48 cents a share for the quarter ended Oct. 30, outpacing the 44-cent estimate of analysts polled by Thomson Reuters.

Macy's

(M) - Get Report

surged 6.6% to $25.56 after it reported better-than-expected same-store sales and raised its second half 2010 outlook.

WholeFoods'

(WFMI)

stock was ahead by 15.1% to $47.27 after the grocery chain posted a quarterly gain of 33 cents a share late Wednesday, exceeding estimates for 28 cents. The company also increased its full-year sales forecast.

D. R. Horton

(DHI) - Get Report

rose 7.8% to $11.77 after a Barclays Homebuilder analyst recommended the stock.

Apollo Group

(APOL)

lost 8% to$35.38 on news that the Department of Education was investigating the financial aid practices of its University of Phoenix business.

Shares of

Qualcomm

(QCOM) - Get Report

were up 5.8% to $48.34 after the company reported a quarterly profit of 68 cents a share late Wednesday, beating estimates of 59 cents.

Shares of

BHPBilliton

(BHP) - Get Report

spiked 5.9% higher to $91.20 a share after the Canadian government rejected its $40 billion bid to acquire

Potash

(POT)

but gave the company 30 days to make an appeal. Potash's stock was down by 2.4% at $141.97.

TimeWarner Cable

(TWC)

shares advanced 4.5% to $62.33 after the company handily beat earnings forecasts for89 cents a share with a profit of $1 a share. Revenue of $4.73 billion squeaked past estimates for sales of $4.72 billion and the company announced a $4 billion share repurchase program.

--Written by Melinda Peer and Shanthi Venkataraman in New York

.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.