U.S. stocks closed higher Wednesday, helped by a bounce in oil prices, after the Federal Reserve took a less aggressive stance than expected. The central bank did raise interest rates, as expected.
The Nasdaq 100 hit a fresh intraday high and closed at a record, helped by record highs in Apple shares. Semiconductor stocks also reversed earlier losses, with the iShares PHLX Semiconductor ETF (SOXX) ending nearly 0.8 percent higher.
"Most people were expecting a much more hawkish statement," said Diane Swonk of DS Economics. "The dissent along with the waffling language on inflation, even though the economic language was strong," indicated continuation of gradual policy, she said.
The Fed raised the target range for the federal funds rate to 0.75 percent to 1 percent. Minneapolis Fed President Neel Kashkari had the only "no" vote.
In a statement, policy makers said they expect labor market conditions to "strengthen somewhat further" and inflation to "stabilize around 2 percent" in the near-term.
Treasury yields fell after the statement release. The 2-year yield dropped to 1.30 percent, its lowest in a about week. Earlier in the session, the yield hit a high of 1.401 percent, its highest since June 11, 2009. The 10-year yield traded around 2.50 percent, also its lowest in roughly a week.
"It was a little bit of a relief rally in bonds. ... There was some nervousness the Fed would be a little more aggressive than suspected," said Bryce Doty, senior fixed income manager with Sit Investment Associates.
However, he expects "this decline in yields is going to be short-lived. If the Fed just raises rates two times [this year], there's no way the two-year yield could be at 1.32 percent."
The U.S. dollar index extended losses to trade more than 1 percent lower at levels not seen in more than two weeks. The euro traded around $1.073 and the yen near 113.4 yen against the greenback.
Financial stocks were the only decliner in the S&P 500. The energy sector led advancers, closing up nearly 2.1 percent as oil reversed a seven-day losing streak. U.S. crude oil futures settled up 2.39 percent at $48.86 a barrel after weekly crude inventory data showed a drawdown in stockpiles.