Stocks end higher as the Fed sees recession easing

NEW YORK (AP) — The Fed confirmed what Wall Street has already concluded: The recession is starting to ease.

Federal Reserve policymakers said at the end of a two-day meeting that while the economy is still receding, the pace of decline “appears to be somewhat slower” than the last time they met in mid-March.

That was confirmation enough for the stock market. Major indexes, which had already been up sharply ahead of the announcement, posted gains of more than 2 percent. The Dow Jones industrial average jumped 169 points to its highest close since Feb. 9.

“It’s all part of a picture of improving confidence,” said Richard E. Cripps, chief market strategist for Stifel Nicolaus.

Stocks began the day higher as investors responded to bright spots within a weaker-than-expected report on the nation’s economic output for the first three months of the year.

Gross domestic product contracted at an annual rate of 6.1 percent, much steeper than the 5 percent forecast by economists polled by Thomson Reuters. But the glimmers of good news in the report drove the Standard & Poor’s 500 rose to its highest trading level since late January.

Investors were encourage by a rebound in consumer spending, which accounts for more than two-thirds of U.S. economic activity, and a decline in business inventories. On President Barack Obama’s 100th day in office, the GDP report at least provided signs that the nation is seeing its economic slide start to moderate.