Stocks staged a late rally Tuesday in a volatile session during which the Federal Open Markets Committee
said it would keep interest rates "exceptionally low" through 2013.
Investors seemed to be uncertain about whether that was a good or bad thing, however, as keeping the key interest rate low also suggests a weak economy.
Stock fluctuated wildly during the day. When it was all over, the Dow Jones Industrial Average rose nearly 430 points, or 4%, to 11,239.77 — rising about 290 points in the last 22 minutes of the session. The session bottomed out
around 2:45 p.m. EST at 10,627.34 — more than 600 points off the close.
The Standard & Poor's
500 Index was up 53.11 points, or 4.74%, at 1,172.57. The Nasdaq Composite Index rose 124.83 points, or 5.3%, to 2,482.52.
Big bank stocks were among those that rallied with Bank of America (BAC)
closing at 7.64, up more than 17% on the day and Citigroup (C)
seeing a more than 14% gain at the close. Wells Fargo (WFC)
was up by more than 8% at the close and JPMorgan Chase (JPM)
climbed just shy of 7%.
Mortgage insurance companies, which have been hammered lately, also rallied with PMI Group (PMI)
gaining significant ground but still trading at less than $1.
Earlier in the day, the Federal Reserve
said it anticipated a sluggish economy.
"To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the committee decided today to keep the target range
for the federal funds rate at 0 to 0.25%" the FOMC said.
The federal funds rate is the interest rate private banks are charged for borrowing from the Fed. When the financial crisis struck in 2008, the central bank lowered its lending rate to zero in an effort to keep liquidity flowing through a market suffering from a credit crunch.
Write to Kerry Curry
Follow her on Twitter @communicatorKLC