Stocks ended near session highs Wednesday, reversing their early declines, as the market cheered news that the Fed will not raise interest rates until at least 2014 in addition to maintaining its highly accommodative stance to support the recovery.
The Dow Jones Industrial Average rallied 81.21 points, or 0.64 percent, to finish at 12,756.96, led by DuPont and Caterpillar .
The S&P 500 added 11.41 points, or 0.87 percent, to end at 1,326.06. The Nasdaq jumped 31.67 points, or 1.14 percent, to finish at 2,818.31.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed near 18.
All key S&P sectors finished higher, led by utilities and materials.
“The fact that [the Fed] extended low rates for another year and then left the door wide open for another stimulus…implies that things are still not as good,” said Kenny Polcari, managing director at ICAP Equities. “This is a manufactured rally—there’s nothing fundamental about this.”
The Fed kept its funds range unchanged near zero and extended its pledge not to boost interest rates until at least 2014, in order to help bolster the weak but modestly growing economy. The Fed has kept its key interest rate at a record low near zero for three years.
Meanwhile, the Fed also downgraded its outlook for economic growth this year to between 2.2 percent to 2.7 percent but pruned its projection for the unemployment rate, saying it expects the rate to fall to a less severe 8.2 percent.
Apple surged to trade at all-time highs after the iPod maker's quarterly results blew past expectationsafter U.S. consumers snapped up near-unprecedented numbers of iPhones and iPads. In addition, a whopping 15 brokerages raised their price target on the firm.
United Tech finished slightly lower even after the diversified manufacturer reported a jump in earnings. Meanwhile, fellow Dow component Boeing said its profit gained, thanks to stronger commercial airplane deliveries.