Dow Jumps More Than 2% on Fed Comments

Wall Street grew bullish Thursday over the prospect of an economy that needs less stimulating.

The major indexes jumped, as traders cheered a pronouncement from the Federal Reserve that economic conditions are improving. Each of the major indexes gained more than 2%. The Dow Jones Industrial Average finished up 173 points at 8472. The Nasdaq picked up 37 at 1830, and the S&P 500 had climbed 19 to 920.

Housing and commodities stocks showed the most life after home builder Lennar (LEN) said orders jumped 63% in the second quarter and oil prices bounced. By 2:37 p.m., crude traded up $1.49 at $70.16 a barrel.

In economic news, the Federal Reserve said it would extend some of its emergency lending programs to promote liquidity through 2010, however the Fed added that certain programs would be allowed to expire, given the market's recent performance. "At the same time, in light of the improvement in financial conditions and reduced usage of some facilities, the Federal Reserve is trimming the size and changing the terms of some facilities," the Fed said in a statement.

The Fed said in its policy statement Wednesday that recent data suggest the rate of economic contraction is slowing.

Broader economic conditions also appeared a bit better in the rear-view mirror, although not by much. The decline of the first-quarter gross domestic product was revised to -5.5%, compared to an earlier estimate of -5.7%.

In labor, the number of people filing for unemployment benefits for the first time rose last week to 627,000, up from the prior week and well above economists' estimates of 600,000. In the prior week, continuing claims dropped for the first time since the week ended Jan. 3, but today's data appeared to dash hopes that a jobs recovery was firmly underway.

Asian markets rose earlier on the Fed's decision, but European markets slumped as investors frowned on a report from the International Monetary Fund that warned Ireland was “especially vulnerable” to recent global market turmoil “given its serious internal imbalances.”

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