Federal Reserve, Good News | featured news

The Federal Reserve says it may start dialing back asset purchases this summer, but Wall Street doesn't seem worried Wednesday with stocks flying Wednesday and driving the major averages to fresh nominal highs.

U.S. consumer prices were flat last month, the latest sign inflation is in check. That could give the Federal Reserve leeway to continue its efforts to stimulate growth. The Labor Department says the consumer price index has risen 1.6 percent in the 12 months ending in January. That's down from a 2.9 percent pace a year ago.

The US Federal Reserve's latest report on the economy says activity has picked up slightly in the past two months.

U.S. consumer prices fell in November for the first time in six months, pointing to muted inflation pressures that should allow the Federal Reserve to stay on its ultra-easy monetary policy path as it nurses the economy back to health.

Consumer prices were flat in July for a second straight month and the year-over-year increase was the smallest in more than 1-1/2 years, giving the Federal Reserve room for further monetary easing to tackle stubbornly high unemployment.

Stocks rose Wednesday, as investors watched Fed Chief Bernanke deliver the semi-annual "Monetary Policy Report to the Congress" before the House Financial Services Committee.

Stocks advanced on Tuesday, putting the S&P 500 on track for its fourth straight gain on increased hopes for central bank stimulus measures ahead of the Federal Reserve's policy meeting.

The Federal Reserve also said on Tuesday that JPMorgan Chase, Wells Fargo, U.S. Bancorp and others could raise dividends or buy back stock.

Bottom Line: Stocks rose in mid-morning trade on Wall Street Tuesday as investors grew more optimistic that the Federal Reserve would announce new moves to stimulate the economy.

The Fed spoke - and financial markets rallied. The Dow Jones industrial average surged more than 429 points, its tenth highest point gain in history and the biggest since March 2009. It was just one day after the Dow had its worst point decline since 2008.