SAN FRANCISCO (Reuters) – The U.S. stock market rose on Friday, after the Federal Reserve announced a tax hike and the first of two bond purchases that should boost economic growth.
The Dow Jones Industrial Average gained 1.9 percent and the S&P 500 rose 2.5 percent.
The S&P 500 is up 14.9 points at 2,086.10.
The Nasdaq is up 3.1 points at 5,927.83.
The Fed is expected to begin raising interest rates on Wednesday for the first time since 2008.
The dollar rose against a basket of currencies and U.s.
Treasury yields fell.
The government on Friday announced the $2,500 tax increase on businesses and large corporations, and the second bond purchase in a month.
The move by President Donald Trump’s administration is a major boost for the economy, but the move is also intended to spur investors to spend money they do not have in stocks.
The tax hike was first announced on Monday, with the goal of raising the income tax rate on those making over $250,000 from 6.2 percent to 7 percent, the highest since 2009.
The Treasury Department on Friday also said it will start spending to boost the U.K. economy, as part of the wider plan to boost economic output.
The first bond purchase of the year, a $1.5 trillion bond, is expected on Tuesday.
The central bank said it would begin issuing $100 billion worth of bonds over the next year, and would be paid for in 2019.
On Thursday, the U,S.
Federal Reserve said it had cut its benchmark interest rate by 0.25 percentage point to 0.75 percent and it raised its benchmark benchmark benchmark price target to 2.75%.
The central banks monetary policy committee, which is comprised of its chairwoman, Janet Yellen, and vice chair, Gary Gensler, met for the second time on Friday to discuss their policy.
The two Fed officials had signaled they were likely to raise rates again soon.
Trump has proposed slashing tax rates and raising spending on infrastructure and education.
The Federal Reserve raised its overnight interest rate for the fourth time in five months, to a record low of 0.50 percent.