Apple takes investors on a wild ride

SAN FRANCISCO — With only modest expectations, Robert Leitao of Santa Clarita made a decision in 1994 that would change his life. He bought Apple stock.

This was several years before Steve Jobs returned to resurrect Apple, long before the iPod, the iPhone or the iPads that would make Apple the most valuable company in the world. A $1 investment in Apple at the start of 1994 is now worth about $70.

"Even with the recent sell-off, I'm still doing very well with the stock," said Leitao, who works as director of operations at a Catholic church in Burbank. "Apple provided for a down payment on our home for our blended family of four kids."

Leitao is one of the countless people whose lives have been touched by Apple's stock, which has become a global economic force. It is now one of the most widely held stocks, and the most valuable. Even as Apple Inc.'s market value fell to $480 billion on Friday, it was still larger than the gross domestic product of Norway or Argentina, and more than the combined value of Google Inc. and Microsoft Corp.

Yet that astonishing size and economic influence is also what, many analysts believe, contributes to the extraordinary volatility that can make owning Apple's stock a hair-raising experience.

It was inevitable, analysts say, that after Apple's stock rose 74% in the first nine months of this year, a huge wave of selling would occur as fund managers locked in their profits. And yet, in recent years, these huge dips have been followed by even bigger run-ups that led to new record highs, a dynamic that one trader refers to as the "Apple slingshot."

That pattern has some analysts betting Apple will soar above $1,000 a share in 2013, a scenario almost guaranteed to drive the global obsession with the company's stock into an even greater frenzy.

"The impact on shareholders and on the economy is incredible," said Howard Silverblatt, senior index analyst for S&P Dow Jones Indices. "We've not seen anything like this in the modern trading era. Ever."

Even after the remarkable decade of Apple's revival, the company's stock managed to reach new milestones this year. Early in 2012, Apple became the sixth company ever to surpass $500 billion in market value. In August, it became the only company in history with a market value topping $622 billion.

That performance affects just about anyone who has a 401(k) account or a pension. According to FactSet, a research firm that tracks investment funds, 2,555 institutional investors — mutual funds, hedge funds and pension funds, among others — owned stock in Apple, just behind the 2,590 that held Microsoft stock, as of Sept. 30, the most recent date funds had to disclose their holdings. However, the value of that Apple stock held by institutional investors on that day was $427 billion, compared with $172 billion for Microsoft, according to FactSet.

Silverblatt said the only company that has come close to having such a strong influence on the broader stock markets since World War II is IBM in the early 1980s, when the PC revolution was just getting started. But not only is the value of Apple's stock remarkable, so is its volatility. Such large stocks rarely have such big, quick swings.

Apple shares peaked at $702.10 on Sept. 19, up from $401.44 at the start of the year, a run that astonished analysts. But just as remarkable has been its collapse, falling as low as $505.75 in intra-day trading Nov. 16.

"It's just amazing because it's such a large company," said Brian Colello, a senior research analyst at Morningstar. "The company lost about $35 billion in market cap in one day. That's the size of some large-cap stocks."

Yet such swings have become commonplace for Apple stock. Before its latest swoon of 23.4% since its September high, Apple had experienced three previous corrections of more than 10% over the last two years.

The value of Apple's stock and its extreme swings have made researching it and trading it almost a full-time job for some people. Jason Schwarz of Marina del Rey edits EconomicTiming.com, which sends out up to five newsletters each week to its 1,000 clients that focus in large measure on Apple. He also helps run Lone Peak Asset Management, which has about $500 million in assets.

Schwarz says that what he calls the "Apple slingshot" is actually a virtue of the shares.

"The extraordinary volatility is the result of Apple's strength," Schwarz said. "People try to blame the volatility on Apple's weaknesses."

Schwarz and many other Apple believers argue that people are making a big mistake when they try to understand the stock's behavior by focusing on various bits of bad news such as an executive shake-up, the Maps controversy or questions about market share or competition. They have almost nothing to do with the regular hits taken by Apple shares, the argument goes.

Instead, folks like Schwarz say more technical factors are at work, such as the fact that the fiscal year for many stock funds ends Oct. 31. When the stock peaked in September, many fund managers rushed to sell to lock in profits for the year. Apple stock makes so much money for so many people, then plummets when shareholders pause to reap their profits, Schwarz says.

The volatility has continued in recent weeks, the argument goes, because fears of higher taxes next year have many fund managers trying to take advantage of short-term swings to make bigger profits. That volatility offers tantalizing windows for huge, short-term profits for investors willing to take the risk.

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RIM shows how BlackBerry 10 touch screen keys could rival its traditional keyboards [video]

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School shooting postpones Cruise premiere in Pa.

NEW YORK (AP) — The U.S. premiere of the Tom Cruise action movie "Jack Reacher" is being postponed following the deadly Connecticut school shooting.

Paramount Pictures says "out of honor and respect for the families of the victims" the premiere won't take place Saturday in Pittsburgh, where "Jack Reacher" was filmed.

The premiere would've been Cruise's first U.S. media appearance since his split from Katie Holmes over the summer. It was to be more contained with select outlets covering and a location away from Hollywood or New York.

A proclamation ceremony for Cruise had been planned with Pennsylvania Gov. Tom Corbett and Pittsburgh Mayor Luke Ravenstahl.

No new date for the premiere has been set. The movie opens Dec. 21.

Friday's massacre at a Newtown, Conn., elementary school killed 20 children and several adults.

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School Yoga Class Draws Religious Protest From Christians

T. Lynne Pixley for The New York Times

Miriam Ruiz during a yoga class last week at Paul Ecke Central Elementary School in Encinitas, Calif. A few dozen parents are protesting that the program amounts to religious indoctrination.

ENCINITAS, Calif. — By 9:30 a.m. at Paul Ecke Central Elementary School, tiny feet were shifting from downward dog pose to chair pose to warrior pose in surprisingly swift, accurate movements. A circle of 6- and 7-year-olds contorted their frames, making monkey noises and repeating confidence-boosting mantras.

Jackie Bergeron’s first-grade yoga class was in full swing.

“Inhale. Exhale. Peekaboo!” Ms. Bergeron said from the front of the class. “Now, warrior pose. I am strong! I am brave!”

Though the yoga class had a notably calming effect on the children, things were far from placid outside the gymnasium.

A small but vocal group of parents, spurred on by the head of a local conservative advocacy group, has likened these 30-minute yoga classes to religious indoctrination. They say the classes — part of a comprehensive program offered to all public school students in this affluent suburb north of San Diego — represent a violation of the First Amendment.

After the classes prompted discussion in local evangelical churches, parents said they were concerned that the exercises might nudge their children closer to ancient Hindu beliefs.

Mary Eady, the parent of a first grader, said the classes were rooted in the deeply religious practice of Ashtanga yoga, in which physical actions are inextricable from the spiritual beliefs underlying them.

“They’re not just teaching physical poses, they’re teaching children how to think and how to make decisions,” Ms. Eady said. “They’re teaching children how to meditate and how to look within for peace and for comfort. They’re using this as a tool for many things beyond just stretching.”

Ms. Eady and a few dozen other parents say a public school system should not be leading students down any particular religious path. Teaching children how to engage in spiritual exercises like meditation familiarizes young minds with certain religious viewpoints and practices, they say, and a public classroom is no place for that.

Underlying the controversy is the source of the program’s financing. The pilot project is supported by the Jois Foundation, a nonprofit organization founded in memory of Krishna Pattabhi Jois, who is considered the father of Ashtanga yoga.

Dean Broyles, the president and chief counsel of the National Center for Law and Policy, a nonprofit law firm that champions religious freedom and traditional marriage, according to its Web site, has dug up quotes from Jois Foundation leaders, who talk about the inseparability of the physical act of yoga from a broader spiritual quest. Mr. Broyles argued that such quotes betrayed the group’s broader evangelistic purpose.

“There is a transparent promotion of Hindu religious beliefs and practices in the public schools through this Ashtanga yoga program,” he said.

“The analog would be if we substituted for this program a charismatic Christian praise and worship physical education program,” he said.

The battle over yoga in schools has been raging for years across the country but has typically focused on charter schools, which receive public financing but set their own curriculums.

The move by the Encinitas Union School District to mandate yoga classes for all students who do not opt out has elevated the discussion. And it has split an already divided community.

The district serves the liberal beach neighborhoods of Encinitas, including Leucadia, where Paul Ecke Central Elementary is, as well as more conservative inland communities. On the coast, bumper stickers reading “Keep Leucadia Funky” are borne proudly. Farther inland, cars are more likely to feature the Christian fish symbol, and large evangelical congregations play an important role in shaping local philosophy.

Opponents of the yoga classes have started an online petition to remove the course from the district’s curriculum. They have shown up at school board meetings to denounce the program, and Mr. Broyles has threatened to sue if the board does not address their concerns.

The district has stood firm. Tim Baird, the schools superintendent, has defended the yoga classes as merely another element of a broader program designed to promote children’s physical and mental well-being. The notion that yoga teachers have designs on converting tender young minds to Hinduism is incorrect, he said.

“That’s why we have an opt-out clause,” Mr. Baird said. “If your faith is such that you believe that simply by doing the gorilla pose, you’re invoking the Hindu gods, then by all means your child can be doing something else.”

Ms. Eady is not convinced.

“Yoga poses are representative of Hindu deities and Hindu stories about the actions and interactions of those deities with humans,” she said. “There’s content even in the movement, just as with baptism there’s content in the movement.”

Russell Case, a representative of the Jois Foundation, said the parents’ fears were misguided.

“They’re concerned that we’re putting our God before their God,” Mr. Case said. “They’re worried about competition. But we’re much closer to them than they think. We’re good Christians that just like to do yoga because it helps us to be better people.”

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Downtown property owners fight MTA subway tunnel plans

As the MTA moves closer to starting construction on a subway tunnel in downtown Los Angeles, some property owners have dug in for a fight.

The big landlords fear that the Metropolitan Transportation Authority's plans to build a massive trench on Flower Street will disrupt their businesses for years, costing millions of dollars in lost revenue.

The four-story-deep canyon planned by the MTA would travel through more than two busy city blocks of the financial district, which includes popular destinations such as the Westin Bonaventure Hotel, the Central Library and the City National Plaza office and retail complex.

Predictably, this clash of potent forces — transportation and real estate — has spawned lawsuits that threaten to delay the project and potentially add millions to the cost.

Influential landowners said they want the city to do more of the work underground to connect separate subway lines into one seamless system. The MTA said it was technologically impossible because of some unusual construction barriers.

What's clear is that the subway has put some of the city's most civic-minded property owners, who helped spawn downtown's renaissance, in the awkward position of opposing a highly popular project that they, in fact, want.

"The connector is very important for the community, and so is the existence of businesses located along the connector route," said Gary L. Toebben, president of the Los Angeles Area Chamber of Commerce. "We were very hopeful there could be a win-win solution. It doesn't look like they have gotten to that point."

The $1.4-billion Regional Connector subway is a top MTA priority because it would eliminate a major bottleneck in the system caused by a lack of interconnections between rail lines. Upon completion in 2019, riders would be able to travel from Azusa to Long Beach or from East Los Angeles to Santa Monica without changing trains twice, as the current system requires.

It also would help speed workers and visitors to the financial district, a major benefit for landlords and tenants.

"We agree the connector will facilitate ridership on the transit system," said Paul S. Rutter, co-chief operating officer of Thomas Properties Group. "We are not objecting to the line or its route."

The problem, as far as property owners are concerned, is how construction would be carried out.

Most of the 1.9-mile subway from Little Tokyo to the 7th Street/Metro Center station would be built underground with tunnel-boring machines.

But the MTA plans to finish the line's last section— 4th Street to south of 6th Street — with "cut and cover" construction.

That means digging a deep, wide trench on Flower Street, laying train tracks and then refilling the trench on top of the new subway tunnel. During most of the construction, the street would be accessible to traffic because of metal plates placed over the hole.

Thomas Properties, the owner of City National Plaza, one of Southern California's largest office complexes, is a leading voice of opposition. The company would like to see tunneling continue south on Flower Street two more blocks to 6th Street.

"We're concerned that the MTA is not taking into account adequately the stakeholders on Flower Street," Rutter said.

The MTA has proposed stopping the tunneling at 4th Street. The transit agency has said a longer tunnel would be too costly and isn't feasible because of underground obstacles left by builders of past projects.

During construction of the Bonaventure, City National Plaza and other skyscrapers in the 1960s and 1970s, builders drove hundreds of steel cables, called tiebacks, deep into the ground to support the underground garage walls made during excavation.

Those cables are no longer structural supports for the buildings, but they are still under the surface and would tangle the maws of digging machines, according to the MTA.

"It's not possible to tunnel through the tiebacks," said Diego Cardoso, an MTA executive officer. "A review by tunnel experts concurs with us."

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The last call for a skid row era at King Eddy Saloon

Wire-thin and slumped like a question mark, James Maley nurses a watered-down whiskey at the battered bar inside the King Eddy Saloon. Around him a boisterous crowd presses in. Maley taps a cracked fingernail nervously on his glass and stares warily at the newcomers.

They've come to see novelist John Fante's son, Dan Fante, read at the bar that inspired his father's 1939 classic "Ask the Dust." They're also here to experience skid row's last dive bar before it shuts down for renovations on Sunday.

"If this happened every day, I would never show up," says Maley, who lives in transitional housing a few blocks away.

Other time-worn regulars, many with leathery skin, bad teeth and watchful eyes, nod in agreement. The bar provides home and family for those who have neither. They come for community and to spend what little money they have on plastic pitchers of beer and $2.50 gin and tonics.

PHOTOS: Last Call at King Eddy Saloon

When the Fante reading ends, the interlopers quickly disperse.

"There go the slummers," says John Tottenham, a poet who has been coming to the King Eddy since the 1980s.

Chances are the crowds will be back when the bar reopens under new management. The owners plan to use old photos to restore the bar's Midcentury look. They hope to renovate the abandoned speak-easy in the basement and open the bar's windows that are covered by stucco, letting natural light into the place for the first time in decades.

They haven't finalized their plans, but one thing is for sure. Drinks won't come cheap at the new King Eddy.

The bar is located on the corner of 5th and Los Angeles streets in the King Edward Hotel, which was built in 1906 and was a tony destination for visitors to what was once a thriving commercial district. The hotel now provides low-income housing for many of King Eddy's regulars.

The pre-Prohibition era King Eddy is painted black. With neon beer signs providing most of its light, the room is dim and gloomy. Its black-and-white checkered floor is grimy. Plastic beer flags hang from the ceiling and the place smells of stale smoke and disinfectant.

The bar itself, shaped in a square, commands the center of the room, with cracked vinyl banquettes lining the perimeter. A glassed-in smoking space is set off to the side. Behind the bar is a tiny fluorescent-lighted kitchen where prepackaged burgers, pizza and sandwiches are heated in a microwave. A beer and burrito would set a person back only $4.

Next week, Maley and the other dislodged drinkers will have to find another bar, but they face a new downtown landscape of high-end mixology bars, restaurants and Brazilian waxing salons.

"I haven't the faintest idea where they'll go," says bar manager Bill Roller, 75, who has worked at the King Eddy for more than 30 years.

King Eddy opened in 1933 and has one of the oldest liquor licenses in the city. It was favored not only by Fante, but also by writers such as Charles Bukowski and James M. Cain for its lack of pretension and colorful clientele.

PHOTOS: Last Call at King Eddy Saloon

"The King Eddy Saloon is the last stand in a world that's completely lost to us — and that's skid row in the 1950s sense, a place where itinerant and semi-skilled laborers could find work seasonally," says downtown historian Richard Schave, who founded the Los Angeles Visionaries Assn., which staged the Fante event.

The bar has been owned by the same family for three generations. Dustin Croick took over in 2008 after his father, Rob, was badly injured in a car accident on his way home from the bar one night. Rob Croick, who has since died, managed the King Eddy for his father, Babe, who bought the bar in the 1960s with money he earned running downtown parking lots.

"This place has been a dive bar since I've been coming here as a kid with my dad, ordering milk and sitting on that stool," says Dustin Croick, 27.

In recent years, Croick has been trying to attract a more mainstream clientele. He started a website that played up the bar's hard-luck roots and featured a catchphrase he coined: "Where nobody gives a … about your name." He tried to lure the producers of the television show "Bar Rescue" to shoot a segment there, but the building's previous owners would not allow the filming.

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From 'Sherlock' to 'Star Trek' for Cumberbatch

LONDON (AP) — Benedict Cumberbatch has had a busy 24 hours.

The British actor was nominated for a Golden Globe, chased by the paparazzi in London and unveiled the first nine minutes of the new "Star Trek" movie Friday.

At a special IMAX presentation of the footage in London, Cumberbatch's menacing character John Harrison was introduced at the beginning of the much-anticipated "Star Trek Into Darkness."

The sequel kicks off at a fast pace, with Captain Kirk's trademark quips, a volcano erupting and Spock in grave danger during a mission to save a planet.

Cumberbatch was not allowed to reveal much about the plot, but the 36-year-old did admit that he auditioned for the role of Harrison — who he describes as "a phenomenal one-man weapon of mass destruction" — on an iPhone in his friend's kitchen.

Fans wanting to see the footage can catch it in front of selected IMAX 3D screenings worldwide of "The Hobbit," beginning Friday.

"Star Trek Into Darkness," directed by J.J. Abrams, opens next May.

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The Associated Press spoke to the "Sherlock" star Friday after the presentation.

AP: "How did it feel coming here and seeing your face so big on that screen?"

BENEDICT CUMBERBATCH: "I always get incredibly nervous, especially on an empty stomach having only had a macchiato. It makes your heart beat a lot faster and I don't like it. I look away when it's me, I don't like being my own audience. It's very weird. ... You probably saw my nostril hairs, counted how many pores I've got on my nose and which one of my teeth is wonky. "

AP: "It's obviously in the great tradition of having an English baddie."

CUMBERBATCH: "I'm following in the very hallowed footsteps of (Jeremy) Irons, (Alan) Rickman and Tom Hiddleston, my great friend in this summer's "Avengers." There are a few of us who have done it before, it stretches back as old as time. They get excited about these actors with theatre training who can do stuff. It's hugely flattering but you're not going to see me do a whole raft of villains after this."

AP: "Congratulations on the Golden Globe nomination (best actor in a miniseries for "Sherlock"). Did you celebrate?"

CUMBERBATCH: "I went out with my niece, who is my PA (personal assistant) Emily, and we got papped (followed by paparazzi) to the point that I couldn't actually see and I had to put my head down and just blink a couple of times. I was trying to get in the car with her and so immediately they presume, 'ah, beautiful blonde.' Poor girl, she's never experienced that before — I've never experienced that — like 15 of them hanging off the bonnet of the car."

AP: "Surely it's only going to get worse after this "Star Trek" film?"

CUMBERBATCH: "I hope not. I don't court it. I think you have to be in certain places at certain times. Of course, promoting a film you're out in the public and I'm proud to do that for the work I've done. But I'm quite a private person at heart."

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HealthBridge Managemant Ordered to Reinstate Striking Workers

A federal judge in Hartford has ordered a Connecticut nursing home chain to reinstate nearly 600 workers who have been on strike since July 3, and to rescind the pension and health care cuts it had imposed.

Judge Robert N. Chatigny of the United States District Court in Connecticut ruled on Tuesday night that the nursing homes’ owner, HealthBridge Management, had broken the law by refusing to bargain in good faith and by imposing the cuts before a true negotiating impasse had been reached.

Judge Chatigny issued an injunction that ordered HealthBridge to reinstate the workers by next Monday, even if it means ousting hundreds of the replacement workers hired to run the nursing homes after the strike began.

“Everybody is quite happy about the decision,” said Vern Scatliffe, a nurse’s aide, as he picketed outside Danbury Health Care Center, one of the five nursing homes — the others are in Milford, Newington, Stamford and Westport — where the workers walked out to protest the cuts HealthBridge had imposed. “The judge’s order is a big relief to me. I can now go back to work and earn my living again.”

Saying the company was disappointed by the judge’s decision, Lisa Crutchfield, a HealthBridge spokeswoman, said it had filed an appeal with the Court of Appeals for the Second Circuit, asking it to overturn the injunction.

“We are acting in the best interests of our residents — their well-being is paramount to us,” she said. Ms. Crutchfield said the order to reinstate the strikers would “expose residents to the very people who sought to do them harm” during the walkout. HealthBridge has accused the strikers of several acts of sabotage, including changing the names on several patients’ doors and wheelchairs and switching the names of some residents in Alzheimer’s units.

Deborah Chernoff, a spokeswoman for the strikers’ union, the New England Health Care Employees Union, said it had opposed any sabotage. She suggested that the allegations themselves were suspicious, noting that they were first made two weeks after the strike began.

The strike began after HealthBridge declared the negotiations deadlocked and then imposed changes that included freezing the workers’ pensions, requiring many to pay at least $6,000 more a year for family health coverage and eliminating six paid sick days and a week’s vacation for many workers.

Two weeks after the strike began, the striking employees, who belong to a branch of the Service Employees International Union, offered to return to work, but the company refused to take them back. Judge Chatigny said it was “just and proper” to reinstate them “because there is a pressing need to restore the status quo” from before the company made the changes, which he found to be illegal.

The judge acted only after the National Labor Relations Board’s office in Hartford sought an injunction.

David Pickus, president of the strikers’ union, said, “This ruling is a decisive victory for workers and a sign that HealthBridge cannot get away with its unfair and illegal treatment of its employees.”

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Stocks are flat in early trading on Wall Street

Major stock indexes are mixed in early trading Friday after a drop in U.S. consumer prices and a strong survey of Chinese manufacturing failed to excite investors.

The Dow Jones industrial average edged up five points at 13,176 a half hour after the opening bell.

Adobe jumped 7 percent after the maker of Photoshop editing software and other applications reported results that beat analysts' expectations. More subscribers for its online Creative Cloud online service helped drive revenue and earnings up. Adobe's stock gained $2.23 to $37.76.

The Standard & Poor's 500 index edged down 4 points to 1,416 while the Nasdaq composite dipped 15 points to 2,976.

Of the 10 industries in the S&P 500 index, technology and energy stocks are down the most.

The Labor Department said a steep fall in gas prices pushed down a measure of consumer prices last month. The consumer price index edged down 0.3 percent in November from October. Gas prices sank 7.4 percent, the biggest drop in nearly four years. Consumer prices have risen 1.8 percent over the past year.

The report helped nudge up prices for U.S. government debt, pushing yields down. The yield on the 10-year Treasury note slipped to 1.71 percent, down from 1.73 percent late Thursday. When inflation is weak, it suggests that interest rates are unlikely to jump, and bond prices unlikely to drop, anytime soon.

Asian markets rose earlier Friday, when HSBC said manufacturing activity in China is picking up. Its index for December rose to 50.9, a slight increase from the previous month. Anything above 50 is a sign of growth.

Among other stocks making big moves:

— Best Buy sank 15 percent, losing $2.20 to $11.91. The struggling electronics retailer and one of its founders, Richard Schulze, agreed to give Schulze more time to assemble a bid for the company. That erased most of the gains made Thursday when Best Buy's stock jumped 16 percent following a report that said Schulze would make a bid by the end of the week.

— Silver Bay Realty Trust rose 14 cents to $18.64 in its first day of trading. Silver Bay raised $245.1 million in its initial public offering on Thursday at an IPO price of $18.50. It plans on using the money to buy thousands of single-family homes and rent them out, as the U.S. housing market slowly heals.

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Fed to tie interest rate to job gains

WASHINGTON — The Federal Reserve said it will continue aggressive measures to stimulate the economy and made a major policy shift to focus more directly on boosting the job market.

Fed policymakers said they would keep interest rates at historically low levels until unemployment drops below 6.5%.

It's likely to keep the Fed's short-term interest rates at historically low levels well into 2015.

The move marked the first time that Fed policymakers have tied themselves to an explicit unemployment goal. It appeared to end the long-running debate within the central bank over how aggressively to target the nation's lagging job market.

The jobless figure was 7.7% in November, and the Fed's new forecast doesn't see that dropping below 6.5% for about three years.

The decision was made easier by the slow pace of inflation, which remains below 2% on an annual basis. Critics of the Fed's policies have argued that efforts to stimulate the economy would lead to inflation, but so far, that has not happened, and Fed Chairman Ben S. Bernanke has argued that the risk is much smaller than the dangers posed by high unemployment.

"The conditions now prevailing in the job market represent an enormous waste of human and economic potential," Bernanke said Wednesday during a news conference after the central bank's last policy meeting of the year.

Under its new policy, the Fed would let its inflation outlook rise to 2.5% before taking action to curtail it — giving the nation's employers more time to create jobs.

The move to link interest rate policies directly to the jobless rate is meant to give the public and businesses greater confidence about how long interest rates will remain exceptionally low, and that by itself could act as a kind of stimulus to the economy.

The new push got a warm welcome from both economists and Wall Street.

Economist Bernard Baumohl at the Economic Outlook Group said the previous time frame for action was "self-defeating because it provided no incentive for employers to start spending any time soon to avoid higher interest rates. It just didn't create any sense of urgency to accelerate investments or increase the rate of hiring."

The Fed has kept its federal funds rate, which influences rates for credit cards, mortgages and business and other loans, near zero since December 2008. Unemployment has been near 8% or above since early 2009.

Bernanke and his colleagues also decided Wednesday to continue the controversial large-scale bond-buying programs in the new year. Specifically, the Fed will buy $40 billion of mortgage-backed securities and $45 billion of long-term Treasury bonds a month.

The purchases are intended to drive down long-term interest rates to spur spending, investment and lending, boosting economic activity as well as hiring.

The central bank launched the purchase of mortgage-backed securities in September to give a lift especially to the housing market, which Fed policymakers said Wednesday "has shown further signs of improvement." They said they would continue to buy bonds until the job market "improved substantially."

The Fed, which has a dual mandate to maximize employment and keep inflation in check, also forecast a somewhat stronger growth for next year.

Its policy statement Wednesday noted a slowing in U.S. business investment and "significant downside risks" in the global economy, but made no mention of the so-called fiscal cliff, the automatic federal budget cuts and tax hikes scheduled to take effect beginning Jan. 1.

In a 75-minute news conference, however, Bernanke said it was clearly evident that concerns about the fiscal impasse already had hurt the economy, weakening business investments and consumer confidence.

He said that whatever the Fed did, it was not enough to offset the full effects of a U.S. economy failing to resolve fiscal issues. But he was cautiously optimistic: "I actually believe that Congress will come up with a solution, and I certainly hope they will."

For years, the Fed didn't give any indication of its future interest-rate path and only in recent years signaled what it might do by using somewhat vague language. In June 2011, the Fed said that it would keep rates exceptionally low for an "extended period." In August 2011, policymakers said no change was likely until at least mid-2013. And that date has since been extended twice, to late 2014 and then mid-2015.

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