Equities rise on Fed stimulus plan for second day

NEW YORK (Reuters) - Stocks rallied for a fourth straight day on Friday, continuing a surge ignited by the Federal Reserve's aggressive new plan to stimulate the economy.

Apple Inc and Exxon Mobil , the two largest U.S. companies by market value, reached new multi-year highs, and the small-cap Russell 2000 <.rut> index hit a record peak.

Equities are in the midst of a run-up in which the S&P 500 has posted gains for four consecutive months, fueled by the actions of Europe's and the United States' central banks to keep interest rates low and stimulate their struggling economies.

The Fed's announcement Thursday that it would keep up its aggressive bond-buying until the labor market improved was unprecedented. It boosted the benchmark S&P 500 index to its highest close since December 2007.

The S&P is now just 6 percent below its all-time closing high of 1,565.15 despite a relatively weak economy and economic risks around the world.

"The Fed's action is good for the stock market ... and it will motivate people to assume more risk," said Ted Weisberg, trader with Seaport Securities in New York. "But it favors asset classes at the expense of everything else. It's inflationary. It could create another bubble."

The Dow Jones industrial average <.dji> was up 63.95 points, or 0.47 percent, at 13,603.81. The Standard & Poor's 500 Index <.spx> was up 8.89 points, or 0.61 percent, at 1,468.88. The Nasdaq Composite Index <.ixic> was up 32.10 points, or 1.02 percent, at 3,187.93.

The announcement pushed the dollar <.dxy> down 0.5 percent against other major currencies, boosting some commodities. Miner Freeport-McMoran Copper & Gold Inc rose 3.7 percent to $42.32 and aluminum company Alcoa Inc advanced 2.6 percent to $9.88. The PHLX Gold/Silver Index <.xau> climbed 3.2 percent to its highest since early March.

The Fed announced the stimulus program on Thursday, its third quantitative easing measure, saying it would pump $40 billion into the U.S. economy each month until the jobs market showed sustained growth.

"The fact is that the economy, at best, is just limping along," Weisberg added. "I don't think what the Fed is doing addresses the real issues. I don't think it puts people back to work. It doesn't make people buy houses."

Data on retail sales and industrial production pointed to modest economic growth in the third quarter. The Thomson Reuters/University of Michigan's preliminary September consumer sentiment index rose to its highest level in four months as Americans were more upbeat about their economic and job prospects.

"All that the central banks are doing right now is buying time to give policy makers an opportunity to act on an effective fiscal reform," said Edward A. Glenn, senior vice president and senior portfolio manager at Morgan Stanley Smith Barney.

S&P Dow Jones Indices said UnitedHealth Group Inc will replace Kraft Foods Inc in the Dow Jones industrial average after the close of trading September 21. UnitedHealth shares rose 1.1 percent to $54.48 and Kraft slipped 0.3 percent to $40.03.

Home Depot , the world's largest home improvement chain, was up 2.1 percent to $59.56 after the company announced it will close all seven of its big box stores and cut 850 jobs in China.

Shares of Analogic Corp were up 11.8 percent to $77.37 after the imaging equipment maker reported a quarterly profit above market expectations, helped by a jump in sales at its ultrasound and security technology businesses.

(Reporting By Aleksandra Michalska; Editing by Kenneth Barry)

Source: http://news.yahoo.com/stock-index-futures-signal-further-gains-084947590--finance.html

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