GloucesterTimes.com, Gloucester, MA

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September 14, 2012

Stocks head higher on day after Fed move

NEW YORK (AP) — A promise from the Federal Reserve of more help for the economy propelled stocks higher for a second day Friday.

Even as they jumped in, some investors said they weren't sure how long the rally would last, but the Dow Jones industrial average was on track to record its best week since the middle of June.

The Dow climbed 60 points to 13,600, its first time at that level since December 2007, the start of the Great Recession. Friday's gain put the Dow less than 600 points away from its all-time high, set in October 2007.

The Standard & Poor's 500 was up 10 to 1,470. The Nasdaq composite index was up 37 points, more than 1 percent, to 3,193, fueled by a jump in Apple, which set an all-time high.

Apple, the most valuable American company in history and the biggest stock in the S&P and Nasdaq, blew through $696 per share to an all-time high on the week that it released iPhone 5.

European and Asian stocks also spiked Friday in their first trading after the Fed move.

Investors are acutely aware of the economy's continuing problems. The stock market is steadily gaining while unemployment remains high and Europe trudges through a debt crisis.

Yet corporate profits remain high, and stocks are not expensive by historical standards compared with earnings.

Several investors said that the Federal Reserve, which touched off the rally Thursday when it announced it would take aggressive steps to try to boost the economy, was providing only a false sense of security.

They said investors were piling in because they believed the Fed would keep propping up the market, or because they wanted to capitalize on short-term euphoria over the Fed move.

Tyler Vernon, chief investment officer of Biltmore Capital in Princeton, N.J., compared the Fed action to "the morphine being pumped into the patient. It keeps the patient walking and talking."

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