Today: The Federal Reserve announces an aggressive approach to boosting the U.S. economy, leading to a booming day for Wall Street. Also: Apple (AAPL) hits record high prices after iPhone 5 announcement, while social stocks are one sector that misses out on gains.
Fed makes stronger move than expected, stock market rockets higher
The Federal Reserve went beyond expectations Thursday, announcing an open-ended bond-buying program meant to add juice to the slowly expanding U.S. economy, a move that sent investors into a frenzy on Wall Street that sent indexes to levels not seen in years.
Fed chairman Ben Bernanke announced a third round of quantitative easing -- purchasing bonds from banks and businesses to give them more liquid capital to spend -- but instead of a limited time period for the move, he said the U.S. central bank will spend as much as $40 billion of newly printed money every month for as long as it takes to push the economy into faster growth, especially in the stagnating labor market.
"It was a very powerful statement," Stifel Nicolaus market strategist Kevin Caron told Bloomberg News. "The Fed is going all in here, especially with their commitment to continue asset purchases until they see the desired result in the form of a lower
The move was extremely aggressive, with economists noting that it went far beyond what was expected and constituted "a bold shift in Fed policy," according to Barclays analyst Michael Gapen.
"Of all the announcements the Fed could have made today, this is very nearly one of the most accommodative that could have been reasonably expected," BTIG's Dan Greenhaus concurred.
Economists were not universally positive on the move -- Capital Economics economist Paul Ashworth told AP, "We doubt it will be enough to get the economy on the right track," and MFR's Joshua Shapiro called it "basically a market/political sideshow" -- but investors were obviously enthused, sending stock indexes to their highest levels since the Great Recession.
The Dow Jones and Standard & Poor's 500 indexes gained 1.6 percent apiece to hit their highest levels since December 2007, when the U.S. economy first began to crash, and the tech-heavy Nasdaq continued to trade at its highest levels since 2000. Investors pushed loads of money into equities, with volume hitting high levels across the board amid broad-based gains -- all 30 stocks in the Dow moved higher and the S&P's 10 sectors all gained at least 1 percent.
"There has been a lot of money that's been sitting on the sidelines, and the Fed action is what spurred people to get in," Tim Ghriskey, chief investment officer at Solaris Asset Management, told Reuters. "The spike in volume is certainly heartening."
Apple hits more record high stock prices after iPhone 5 unveiling
The most newsworthy stock of 2012, Cupertino tech giant Apple, continued its incredible run Thursday, as Wednesday's announcement of the iPhone 5 and other changes led to analyst upgrades and record highs on Wall Street.
Apple moved higher in the morning session on the strength of Wednesday's event, at which the company showed off the newest iteration of its wildly popular (and profitable) smartphone. Analysts showered praise on the company Thursday for its aggressive launch schedule for the new device, with consumers in the United States and eight other countries gaining access to the device Sept. 21, launches in more countries Sept. 28 and 100 countries gaining access to the iPhone 5 by the end of the year.
"We are positively surprised that this iPhone rollout is Apple's fastest yet," Barclays Capital said in a note, according to Reuters. "Given this pace, it would seem Apple is very well positioned for upside in the December quarter."
Despite early reviews contending the upgrade from the iPhone 4S wasn't substantial and that consumers could find a better bargain from Apple's competition -- "You can get a better phone for less money," analyst Rob Enderle told the Mercury News on Wednesday -- the buzz and increased availability pushed analysts to increase their estimates of iPhone sales for the current quarter up as much as 36 percent, and price targets for the stock increased as well.
With the additional boost from the Fed's announcement, Apple established an all-time intraday high Thursday afternoon of $685.50, beating a record set just three days earlier of $683.29; the stock ended the session at $682.98, beating Friday's record closing price of $680.44.
Social stocks unable to keep up with rest of market's gains
The two struggling young stocks received a big boost on Wednesday, after Apple announced increased Facebook integration and Facebook CEO Mark Zuckerberg's first public appearance since Facebook's record-breaking initial public offering. The move was unsustainable for a day, however, as Facebook declined 1 percent and Zynga fell back 3.6 percent.
San Francisco online-reviews company Yelp slid for the second straight day after Apple chose to highlight integration with OpenTable instead of Yelp at Wednesday's event; the stock ended the day down 7.2 percent and has now fallen 8.6 percent in the past two days. Even LinkedIn, the most stable of the valley's social stocks, declined 0.1 percent.
Other Bay Area tech companies prospered Thursday along with the rest of the market, however, as the SV150 index of Silicon Valley's largest tech companies advanced 1.6 percent.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Up 41.52, or 1.33 percent, to 3,155.83
The blue chip Dow Jones industrial average: Up 206.51, or 1.55 percent, to 13,539.86
And the widely watched Standard & Poor's 500 index: Up 23.43, or 1.63 percent, to 1,459.99
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.