Stocks post modest gains on Fed news
Stocks rose modestly Wednesday after the Federal Reserve's latest interest rate meeting ended without any surprises, allowing investors to continue to focus on takeover scenarios and strong corporate profits.
The Dow Jones industrial average marked its sixth record close in seven sessions. The Standard & Poor's 500 index climbed to within 1% of its 2000 all-time high.
Investors also were pleased by another drop in oil prices and a government report indicating that the country's gasoline inventories rose last week after three months of declines. If inventories keep increasing, fuel costs for U.S. drivers are likely to ease.
Stocks have rallied in recent weeks on surprisingly robust first-quarter results and a steady flow of major takeover bids.
The Fed, leaving its key short-term interest rate unchanged, said the economy was growing at a moderate pace and that core inflation, while elevated, was likely to slow.
Share prices treaded water for most of the session, then rallied after the Fed issued its statement.
"The Fed is keeping a watchful, parental eye on the rate of inflation, and the rate seems to be quite manageable," said Georges Yared, investment strategist at Yared Investment Research in Wayzata, Minn. "I think investors are reacting positively to the fact that the Fed didn't really rock the boat."
The Dow rose 53.80 points, or 0.4%, to 13,362.87, its 21st record close since the beginning of the year.
The S&P 500 added 4.86 points, or 0.3%, to 1,512.58 -- a new 6 1/2 -year high and within sight of its record close of 1,527.46 reached March 24, 2000.
The Nasdaq composite index climbed 4.59 points, or 0.2%, to a six-year high of 2,576.34.
The Russell 2,000 index of smaller companies rose 3.87 points, or 0.5%, to a record close of 834.77.
Advancing issues outnumbered decliners by about 7 to 4 on the New York Stock Exchange.
The stock market has reacted well to the Fed's stance of holding rates level, its policy since August; the Dow has hit 43 record closes since the start of October.
"I think the markets can react favorably without the Fed lowering rates," said Steven Goldman, a strategist at Weeden & Co., saying rates would remain stable as long as the economy kept growing moderately and inflation didn't accelerate too much. "We walk this tight line, and equities continue to edge higher."
