New York--The prospect of lower interest rates from the Federal Reserve for a longer time was all US investors needed this week to ignore the Greek crisis and the Chinese meltdown.
Even as Greece's inability to strike a new bailout agreement with official creditors threatened eurozone stability, Wall Street was comfortable with the idea of more cheap dollars and steady US economic growth.
The 13 percent fall in Shanghai stocks over the week, half of it on Friday, also appeared to mean little.
While caution reigned on Friday -- a quadruple witching day of settlement for four key futures and options contracts -- the indices still finished the week strongly, with the Nasdaq setting a new record on Thursday.
For the week, all three key indices managed 1.01 percent gains. The Dow Jones Industrial Average finished at 18,014.28; the broad-market S&P 500 was at 2,109.76; and the Nasdaq Composite ended at 5,117.00, below its record close of 5,132.95 on Thursday.
The gains came for the market despite further signs of lower corporate profit growth and nothing new on the economy.
The big impetus was the dovish stance the Fed assumed coming out of its two-day policy meeting Wednesday.
As expected the Fed kept its benchmark interest rate unchanged at zero percent, but forecast a likely increase to 0.5 percent in two steps before year-end.
But what pleased equities investors was that the central bank sounded less sure of the economy's strength than a few months ago, and was now forecasting a much slower climb in rates over the next two years.
Chris Low of FTN Financial said that Fed Chair Janet Yellen's tone revealed "a distinct lack of eagerness about tightening, which I think investors found quite convincing."
AFP
