US stocks rose for a sixth day, the longest rally since August, while the dollar weakened after the Federal Reserve announced plans to buy more Treasuries to boost growth. Oil climbed on forecasts for stronger demand.
The Standard & Poor's 500 Index rose 0.6 per cent at 12:51 p.m. in New York. The Dollar Index fell for a third day, losing 0.4 per cent as it extended losses after the Fed's statement. Treasuries retreated on concern the central bank's plans for quantitative easing will stoke inflation. Crude oil rallied 2per cent to $US87.47 a barrel, climbing for a second day after a five-session slump.
The Fed said it will buy $US45 billion a month of Treasury securities starting in January, matching forecasts from economists in a Bloomberg poll, and it linked the outlook for its main interest rate to unemployment and inflation. The announcement eased concern about the effects on the economy from potential federal budget cuts and tax increases next year.
"Fed Chairman Bernanke is riding shotgun on the economy and on the market, in effect," John Stoltzfus, chief market strategist at Oppenheimer & Co. in New York, told Bloomberg Television. "I think it's very positive for economic growth," he said. And it "underpins also any turbulence we have related to the cliff."
The Fed said interest rates will stay low "at least as long" as the unemployment rate remains above 6.5 per cent and if inflation "between one and two years ahead" is projected to be no more than 2.5 per cent. The committee "views these thresholds as consistent with its earlier date-based guidance."
A Bloomberg National Poll shows President Barack Obama won the public argument over taxes and his plan to protect Social Security and Medicare benefits.
Among US stocks, DuPont Co. advanced 2.2 per cent as the chemical maker announced a share buyback and said 2012 earnings will be at the high end of forecasts. Berkshire Hathaway Inc. climbed 2.7 per cent after lifting the threshold it will pay for stock, signaling that Chief Executive Officer Warren Buffett views the shares as undervalued. Eli Lilly & Co. sank 3.2 per cent after saying it's conducting an added study for an experimental Alzheimer's drug.
US stocks rallied yesterday, with the Dow Jones Industrial Average erasing its decline since Election Day, as traders awaited progress on federal budget negotiations. The S&P 500 failed to close above its Nov. 6 level yesterday after rising above during the session.
Obama is seeking a budget deal with Republican lawmakers to avert the so-called fiscal cliff, which would result in more than $US600 billion of automatic tax increases and spending cuts next year. Obama reduced his demand for tax increases to $US1.4 trillion from $US1.6 trillion as he and House Speaker John Boehner traded another round of offers.
Boehner told reporters today that Obama's plan cannot pass the House or Senate and "we've got some serious differences" on the fiscal cliff.