Wall Street hits session highs as Fed upbeat on economy

Reuters
Traders wait for the opening of Oi SA during its debut on the New York Stock Exchange
.

View photo

Traders wait for the opening of Oi SA during its debut on the New York Stock Exchange April 29, 2014. …

By Caroline Valetkevitch

NEW YORK (Reuters) - The Dow and S&P 500 added to gains while the Nasdaq turned positive on Wednesday after the Federal Reserve gave an upbeat assessment of the economy's prospects as it announced another cut in its massive bond-buying program.

The Fed said in a statement it would reduce its monthly bond purchases to $45 billion from $55 billion, a widely-expected decision that keeps it on track to end the program as soon as October.

That the Fed looked past a dismal reading on first-quarter U.S. economic growth suggested confidence in the economy's prospects. Also, its statement was more upbeat than the one it issued after its last policy meeting on March 19.

Stocks initially held near steady following the announcement, but soon rose to session highs.

"They are seeing some economic activity pick up after the slowdown during the winter," said Joe Bell, senior equity analyst at Schaeffer's Investment Research in Cincinnati. That "is one positive sign."

All 10 S&P 500 sectors were in the black, led by the economically-sensitive S&P material sector, up 0.8 percent.

EBay remained the biggest negative influence on both the S&P 500 and Nasdaq. Its shares fell 4.7 percent to $51.95, a day after it forecast lower-than-expected earnings this quarter.

The Dow Jones industrial average rose 44.21 points or 0.27 percent, to 16,579.58, the S&P 500 gained 5.41 points or 0.29 percent, to 1,883.74 and the Nasdaq Composite added 7.9 points or 0.19 percent, to 4,111.443.

Earlier, data showed gross domestic product expanded at a 0.1 percent annual rate in the first quarter, the slowest since the fourth quarter of 2012, as exports and inventories weighed, but activity already appears to be bouncing back.

Twitter shares fell 10.1 percent to $38.28 and hit a record intraday low of $37.25, a day after posting lackluster user and usage growth for the second consecutive quarter.

(Editing by Bernadette Baum and Nick Zieminski)

View Comments (0)