Wall Street rallies after Fed launches more stimulus

US-MARKETS-STOCKS:Wall Street rallies after Fed launches more stimulus

By Aleksandra Michalska

NEW YORK (Reuters) - Stocks rallied after the Federal Reserve announced another aggressive stimulus program for the economy on Thursday, vowing to continue until the jobs market improves substantially.

In a significant shift in monetary policy, the Fed said it would buy $40 billion of mortgage debt per month and will continue to purchase those and other assets until the weak employment picture shows marked improvement.

The S&P 500 hit 1,448.64, its highest intraday level since January 2008, before paring gains modestly. With the benchmark index up 16 percent since the beginning of the year and stocks' recent advance fueled by hopes for more help from other central banks, the gains may be an opportunity for investors to pare positions.

"The market is obviously reacting positively to this news, but it wouldn't surprise me if we saw some of these gains dissipate as that day wears on," said Thomas Villalta, portfolio manager at Jones Villalta Aasset Management in Austin, Texas. "I think a lot of this was already built into the price. Long term, a lot of people have to be looking at this as inflationary."

The Dow Jones industrial average <.DJI> was up 78.52 points, or 0.59 percent, at 13,411.87. The Standard & Poor's 500 Index <.SPX> was up 9.43 points, or 0.66 percent, at 1,445.99. The Nasdaq Composite Index <.IXIC> was up 20.03 points, or 0.64 percent, at 3,134.34.

Earlier economic data showed the number of Americans filing new claims for jobless benefits rose more than expected last week. Wholesale prices rose 1.7 percent in August, the largest gain since June 2009, although core inflation was stable.

Apple's stock <AAPL.O> > was up 1 percent to $676.88 after analysts said sales of the new iPhone 5 could double those of the previous model in its first week on the market.

(Additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)

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