NEW YORK: After an early-December swoon, US stocks soared this week, powering to new records after the US Federal Reserve announced plans to begin scaling back its stimulus program.
The biggest portion of the week's gains came on Wednesday just after the Fed's announcement it will trim $10 billion in monthly asset purchases to $75 billion in January. Stocks advanced again Friday following a surprising upgrade to US economic growth in the third quarter.
At Friday's close, the Dow Jones Industrial Average rose a whopping 465.82 (2.96 percent) for the week to 16,221.14, a new record.
The broad-market S&P 500 finished up 43.0 (2.42 percent) at 1,1818.32, also a new record. The tech-rich Nasdaq Composite Index rose 103.76 (2.59 percent) to 4,104.74.
The market gave the thumbs-up to Federal Reserve Chairman Ben Benanke's handling of the long-discussed taper to the stimulus, which is viewed as a workable strategy for ultimately ending the bond-buying program.
"The Fed threaded the proverbial needle," Dan Greenhaus, chief global strategist at BTIG, said Wednesday after the Fed news.
Alan Skrainka, chief investment officer at Cornerstone Wealth Management, said Bernanke pivoted after the markets reacted "very violently" to talk of tapering earlier this year.
"That taught him an important lesson: 'I can take something away from the markets, but I need to give something back,'" Skrainka said.
The Fed paired its decision to begin tapering with a pledge to maintain near-zero interest rates for longer, likely until "well past the time the unemployment rate declines below 6.5 percent."
Such a move is "overwhelmingly positive" for the still-recovering economy, Skrainka said.
One risk, Skrainka said, is that the strategy is tailored for a slow-growth economy. The Fed could need to adjust its strategy if the pace of economic recovery accelerates and inflation suddenly becomes a concern, he said. But Skrainka and others do not expect such a scenario.
"We're still in this modest-growth, modest-inflation economy," said Scott Wren, senior equity strategist at Wells Fargo Advisors. "The market is a little ahead of itself."
Corporate-news highlights included Dow component Boeing's plan for a $10 billion share buyback and a 50 percent dividend hike.
The aerospace giant followed that up with a spate of executive promotions, including tapping Dennis Muilenburg, currently chief of the defense division, to serve as president and presumed chief executive to-be.
Information technology giant Oracle also had a big week, posting major gains after earnings bested expectations and executives expressed confidence about its cloud-computing business. On Friday, it said it was acquiring cloud software company Responsys for $1.5 billion.
On the downside, Target rattled the market and countless shoppers when it disclosed that a data breach to its payment system had affected some 40 million customers. Among the data stolen: credit card numbers, the name of the consumer, the security code and the expiration date.
Ford Motor also had a bad week after projecting lower 2014 profits and signaling that its medium-term profit margin forecast was at risk due to weak conditions in Europe and South America, especially Venezuela.
Trading volume next week is expected to be light, with many money managers on vacation due to the Christmas holiday, which will close markets on Wednesday and Tuesday afternoon.
The market will also be watching for a couple of data releases, including durable goods orders, new residential sales and the weekly jobless claims report.
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