* Fed to keep buying $85 bln per month in assets
* Aetna shares rise after outlook
* Dow up 0.5 pct; S&P 500 up 0.7 pct; Nasdaq up 0.4 pct
By Chuck Mikolajczak
NEW YORK, Dec 12 U.S. stocks climbed to session
highs on Wednesday after the U.S. Federal Reserve announced a
new stimulus plan at the end of its two-day monetary policy
meeting in its latest attempt to kickstart a struggling economy.
The central bank replaced a more modest stimulus program due
to expire at year-end with a fresh round of Treasury purchases
that will increase its balance sheet, as was widely expected. It
committed to monthly purchases of $45 billion in Treasuries on
top of the $40 billion per month in mortgage-backed bonds it
started buying in September.
"The market was expecting this - they basically stopped
doing the Operation Twist, and it looks like they are going to
be doing $45 billion a month in Treasury purchases, which was
the expectation," said Troy Logan, managing director and senior
economist at Warren Financial Service, in Exton, Pennsylvania.
"This was expected, and the market is waiting for the
year-end 'fiscal cliff' issue to be solved, so what we have to
do is have confidence our political system can actually make a
U.S. House of Representatives Speaker John Boehner said on
Wednesday "serious differences" remain with President Barack
Obama in talks to avert the "fiscal cliff" of steep tax hikes
and budget cuts set for the end of the year.
The S&P 500 was up for a sixth straight day, its longest
winning streak since August, although gains have been less than
0.5 percent per day, on average, in part due to uncertainty over
the cliff negotiations.
The Dow Jones industrial average gained 71.44 points,
or 0.54 percent, to 13,319.88. The Standard & Poor's 500 Index
rose 10.19 points, or 0.71 percent, to 1,438.03. The
Nasdaq Composite Index advanced 12.29 points, or 0.41
percent, to 3,034.59.
Shares of Aetna, the third-largest U.S. health
insurer, jumped 4.8 percent to $46.61 a day after the company
gave a higher forecast for profit and revenue growth next year.
Wal-Mart Stores Inc fell 2.3 percent to $69.24 as
the biggest drag on the Dow after India's government announced
an inquiry into the company's lobbying practices.