Dow Charges 2.2% Higher for Week in Fed-Fueled Rally

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The blue-chip average capped the week at the highest level in nearly five years as traders responded to upbeat headlines from Europe and cheered a fresh round of easing from the Federal Reserve.

Today's Markets

The Dow Jones Industrial Average rose 53.5 points, or 0.4%, to 13593, the S&P 500 gained 5.8 points, or 0.4%, to 1466 and the Nasdaq Composite climbed 28.1 points, or 0.89%, to 3184.

It was the best week for the Dow since early June. The broader markets had a strong week as well: the S&P 500 jumped 1.9% and the Nasdaq rallied 1.5%.

The sharp turn higher for equities came after the Fed unveiled an open-ended plan to buy mortgage-backed assets at a clip of $40 billion a month. The central bank also pledged to take more actions, if necessary, to give the stodgy economy and labor market a fresh jolt of power.

Michael Gapen, an analyst at Barclays capital, said in a note to clients that the Fed move signals "new era for unconventional balance sheet policy." The investment bank said the plan is likely to be positive for risky assets, and negative for the U.S. dollar.

Oil prices rallied above the $100 a barrel mark for the first time since May as traders responded to liquidity from the Fed and increased geopolitical uncertainty in the Middle East and North Africa. The benchmark contract recently jumped 69 cents, or 0.7%, to $99.00 a barrel. Wholesale New York Harbor gasoline rallied 1.8% to $3.016 a gallon.

Gold advanced 60 cents, or 0.6%, to $1,773 a troy ounce.

There are a slew of economic reports on tap for Friday.

The Labor Department said inflation at the consumer level rose by 0.6% in August, more than the 0.5% expected and the largest rise since June 2009, predominantly as a result of rising gas prices. Excluding the food and energy components, prices were up 0.1%, just under the 0.2% expected.

A separate report from the Commerce Department showed U.S. retail sales rising 0.9% in August from July, more than the 0.7% expected and the largest rise since February. Excluding the auto segment, sales were up 0.8%, topping estimates of 0.6%.

Also potentially affecting retailers is a survey from Reuters and the University of Michigan showing consumer sentiment unexpectedly jumped in early September. The preliminary reading of the gauge came in at 79.2, up from 74.4, and much better than then 74 economists expected.

A separate report showed U.S. industrial output having slumped 1.2% in August from the month before. Economists expected the gauge from the Federal Reserve to hold steady.

In corporate news, S&P Dow Jones Indices said UnitedHealth Group (NYSE:UHC) will replace Kraft Foods (NYSE:KFT) on the Dow Jones Industrial Average at the start of trading next Monday. The company said the change was prompted by Kraft's move to spinoff its North American grocery business, which will reduce the company's market capitalization and projected revenues. UnitedHealth, an insurer, will bring more health-care diversification to the blue-chip index, the company said.

Apple (NASDAQ:AAPL) appeared to sell out on the first round of pre-orders for its iPhone 5 within in an hour, in what could be a sign of demand for the device. Customers looking to buy the product through Apple online in the U.S. will now need to wait two weeks for it to ship, according to Apple's website. It debuts on September 21.

Foreign Markets

The Euro Stoxx 50 soared 2% to 2595, the English FTSE 100 rallied 1.6% to 5916 and the German DAX jumped 1.4% to 7412.

The Japanese Nikkei 225 lurched higher by 1.8% to 9159 and the Chinese Hang Seng surged 2.9% to 20630.