U.S. stocks surged on Wednesday, with the Dow marking its best session of the year, as investors celebrated a rally in the energy sector and the Federal Reserve's pledge to be patient in raising interest rates.
Stocks rose after the Federal Reserve retained the phrase "considerable time" in its policy statement, and also introduced another word, "patient," as the central bank readies to raise interest rates next year.
The subtle change in wording could be a "compromise between keeping it in there and pulling it out completely, or that's my reading of the tea leaves," said Tom Kersting, principal and fixed income investment strategist for Edward Jones.
"The Fed will continue to be supportive of the economy, which is ultimately good for equity markets, at least in the short term. Longer term, equities are driven by earnings growth, and an economy that continues to improve will help earnings growth," Kersting said.
Addressing a televised news conference, Fed Chair Janet Yellen said the new language was not a change in policy, and that a rate increase was unlikely for the next several meetings.
"The equity markets are celebrating this as less hawkish than anticipated," said Art Hogan, chief market strategist at Wunderlich Securities.
"If we walked in today concerned about anything other than the price of a barrel of oil and Russia imploding, it was a more hawkish Fed statement, and that didn't happen," Hogan added.
"It's hard to separate what's going on with the Fed and what's going on globally, the issues with energy and the Russian currency crisis. The information that the Fed provided today doesn't really change much. It sounds like they are still thinking sometime in the middle of next year," RogerBayston, senior vice president of Franklin Templeton's fixed-income group.
Energy producers led Wall Street gains, and the price of oil turned higher.
"West Texas has stabilized a bit here. Maybe that's enough to stop the precipitous decline in oil shares, as that sector was completely washed out," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
The cost of living declined in November as energy prices fell, with the Labor Department's consumer price index falling 0.3 percent, the largest drop since 2008. Low inflation gives the Fed more reign to take its time in increasing rates.
The core rate, which excludes food and energy, climbed at a slower pace than last month.