Dow spikes briefly on US rate news

Wall Street rallied briefly overnight, Australian time, after the US Federal Reserve kept America’s official interest rates on hold, at 2 per cent, as expected.

The Dow Jones industrial index initially rose 100 points on that news.

But it eased later, to close just 4.4 points up at 11,811.83 points.

US authorities also signalled overnight that they are tightening their focus on inflation.

The S&P 500 closed points 7.68 points up at 1,321.97.

And the tech heavy NASDAQ composite index closed 32.98 points up at 2,401.26.

Oil futures eased overnight falling $US2.44 to $US134.56.

The Fed admitted, in a statement overnight, that it fears that rising fuel prices could boost US inflation, as the American economy recovers.

The small fall in oil futures followed news that US oil inventories had risen for the first time in six weeks.

Credit Suisse economists said the Fed’s statement virtually ruled out any potential rate rise in the US until a new president is elected in November.

And a new poll, published by CNN, said Barack Obama has now opened up a 12 point lead over his Republican rival, John McCain.