(By Balachander) U.S. stocks ended sharply higher after the Federal Reserve announced plans to purchase mortgage bonds at a pace of $40 billion per month to spur growth.
S&P 500 Index rose 1.63 percent to finish at 1,459.99. The Dow Jones Industrial Average jumped 1.55 percent to end at 13,539.86. The Nasdaq Composite Index added 1.33 percent to close at 3,155.83.
The Federal Open Market Committee (FOMC), the rate-setting committee of the Federal Reserve, also decided to keep interest rates "exceptionally low" at least through middle of 2015.
The policy should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, the FOMC said.
Fed Chairman Ben Bernanke justified the latest action from the central bank, saying new measures were needed to address persistently high levels of unemployment.
If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate, the FOMC said.
Meanwhile, the Fed reduced its 2012 growth projections to 1.7 percent to 2.0 percent from June forecast of 1.9 percent to 2.4 percent, but raised 2013 GDP projections to 2.5 percent to 3.0 percent from 2.2 percent to 2.8 percent.
On the domestic data front, the number of Americans who continued to receive jobless benefits rose more than forecast, a government data showed. Jobless claims increased 15,000 to 382,000 for the week ended Sept.8 from a revised 367,000, while economists projected 370,000 applications.
Meanwhile, the U.S. Labor Department said core producer price index in August rose 0.2 percent, matching economists expectations. The headline index also gained 1.7 percent, topping estimate of a rise of 1.1 percent. In July, producer prices and core producer prices rose 0.3 percent and 0.4 percent, respectively.
Hot Stocks Of The Day: EQIX, PLL, FMER, DST, DSW, GWR, LRN, VICL, CRTX
In corporate news, Equinix Inc. (NASDAQ:EQIX) surged 7.48 percent after the interconnection and data center company said its board has approved a plan for Equinix to pursue conversion to a real estate investment trust (REIT).
Apple Inc. (NASDAQ:AAPL) added 1.99 percent after the world's most valuable technology company unveiled iPhone 5, the thinnest and lightest smartphone ever on Thursday. Deutsche Bank believes iPhone 5 will drive a healthy upgrade cycle and with greater product visibility.
Pall Corp. (NYSE:PLL) jumped 7.96 percent after the company's quarterly results topped market expectations.
Firstmerit Corp. (NASDAQ:FMER) dropped 11.25 percent after the Akron, Ohio-based financial services provider agreed to acquire Citizens Republic Bancorp Inc. (NASDAQ:CRBC) for $912 million in stock. CRBC shares inched higher.
DST Systems Inc. (NYSE:DST) gained 5.36 percent. The information processing and software services company named Stephen Hooley as it chief executive, succeeding Thomas McDonnell, who will retire on December 31, 2012.
DSW Inc. (NYSE:DSW) added 2.31 percent after the footwear retailer declared a special dividend of $2.00 per share, totaling about $91 million.
Genesee & Wyoming Inc. (NYSE:GWR) shed 4.58 percent after the railroad operator announced an offering of 3.5 million shares of its Class A common stock.
K12 Inc. (NYSE:LRN) surged 5.52 percent after the online learning platform posted a quarterly profit amid 33 percent jump in revenue.
Vical Inc. (NASDAQ:VICL) advanced 6.63 percent after the company announced it was licensing its DNA immunization technology to drug maker Bristol-Myers Squibb Co. (NYSE:BMY). Under the agreement, Bristol-Myers will use Vical's technology to generate antibodies with potential therapeutic uses in humans.
Cornerstone Therapeutics Inc. (NASDAQ:CRTX) plunged 21.17 percent. An advisory committee of the U.S. Food and Drug Administration (FDA) voted against the approval of the company's new drug application (NDA) for lixivaptan for the treatment of hyponatremia, a metabolic condition that occurs when there is not enough sodium (salt) in the blood.
European markets ended mixed, with Germany's DAX down 0.45 percent to close at 7,310.32. France's CAC40 retreated 1.18 percent to finish at 3,502.09. U.K.'s FTSE 100 added 0.65 percent to end at 5,819.92.
Asian markets closed mixed, with China's Shanghai Stock Exchange Composite Index down 0.76 percent to finish at 2,110.38. Japan's Nikkei 225 gained 0.39 percent to end at 8,995.15. Hong Kong's Hang Seng Index shed 0.14 percent to close at 20,047.63. India's BSE Sensex closed at 18,021.16, up 0.12 percent.
Commodity & Currency Scan:
Crude oil futures added 1.10 percent to $98.08 per barrel while natural gas futures dropped 0.98 percent to $3.033 per million metric British thermal units. Gold futures climbed 1.97 percent to $1,767.8 per ounce and silver futures jumped 3.97 percent to $34.615 per ounce.
In the currency market, the euro rose 0.65 percent against the U.S. dollar to 1.2984. The British pound gained 0.25 percent against the greenback to 1.6148, while the dollar fell 0.45 percent against the Japanese yen to 77.5000.