S&P 500 and the economy Obama's pledge

Stocks rose around the world, sending the Standard & Poor's 500 Index to a one-month high, as President-elect Barack Obama pledged to boost the economy with the biggest public-works spending package since the 1950s. Obama said Dec. 6 he will boost investment in roads, bridges and public buildings to create or preserve 2.5 million jobs after companies cut payrolls at the fastest pace in 34 years.

Traders increased bets the Fed will lower its target rate on overnight loans between banks to 0.25 percent from 1 percent on Dec. 16 after companies cut workers at the fastest pace in 34 years in November. Futures contracts on the Chicago Board of Trade show 76 percent odds of a three-quarter-percentage point cut, up from 26 percent a week ago.

The U.S. is starting to look like Japan in the 1990s, when the Bank of Japan struggled to revive growth as the combination of deflation and recessions stranded the nation in the so-called Lost Decade. Yields on Treasuries are falling as the government sells a record amount of debt to prop up the American economy.

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