Dow, stocks end higher after Federal Reserve signals patience on future interest rate hikes
Stocks finished higher on Wednesday after the Federal Reserve kept a benchmark interest rate unchanged and indicated it would be "patient" with future hikes.
Better-than-expected earnings reports earlier in the day also helped to position stocks for a positive day.
The Dow Jones Industrial Average jumped 435 points, or 1.77 percent, to close at 25,015. The Standard & Poor's 500 index added 41 points, or 1.55 percent, to end at 2,681 points on Wednesday.
The tech-heavy Nasdaq composite gained 155 points, or 2.2 percent, to finish at 7,183 points. Technology stocks have been battered in the last few months on concerns that growth would be hampered by higher borrowing costs.
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Fed turns dovish
On Wednesday, the central bank maintained the federal funds rate, a key rate used to set consumer and business loan rates, between 2.25 percent and 2.5 percent.
Even more significant to market watchers, the Fed said in its statement following the policy decision that it would "be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes."
In a separate statement, the central bank also said it would reconsider the pace and size of the reduction of its $4 trillion holdings of Treasurys and mortgage-backed securities it amassed during the Great Recession to help keep interest rates low.
"Investors wanted to see this, as the Fed came off surprisingly hawkish at the last meeting," said Ryan Detrick, senior market strategist for LPL Financial in an emailed statement. "We will see how things hold up here, but so far, so good."
Upbeat earnings
The Fed news comes after Boeing blew away analysts' forecasts for earnings and as its annual revenue topped $100 billion for the first time. Revenue surged 14 percent as the company delivered more commercial and military planes. The company's stock was up 6.25 percent to close at $387.72.
Apple gained ground after investors brushed off a slide in iPhone sales. Its shares increased 6.83 percent to end at $165.25.
The company jolted the market when it warned earlier this month that it would miss its own revenue projections for the first time in 15 years. A 15 percent drop in iPhone sales dragged down revenue and profit and the company gave a soft outlook for the latest quarter.
Health insurer Anthem stocks rose on an upbeat outlook for the year. It said adjusted earnings in the new year are expected to be better than $19 per share, or about 8 percent higher than Wall Street had been expecting. Its shares gained 9.11 percent to $297.56 on Wednesday.
Chinese concerns
Meanwhile, trade talks that opened Wednesday between the U.S. and China will loom over the market for the remainder of the week. The high-level talks are aimed at settling a months-long trade war that has raised fears of slower economic growth. Industrial and technology companies have warned about slowing sales because of the trade impasse.
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President Donald Trump will reportedly meet Chinese Vice Premier Liu He in an attempt to move negotiations forward. But the Justice Department's charges against Chinese tech giant Huawei, its subsidiaries and a top company executive may be a hurdle. China has urged U.S. authorities to end what it called an "unreasonable crackdown" against Huawei, which has been accused of stealing technology and violating sanctions on Iran.
Contributing: The Associated Press
This article originally appeared on USA TODAY: Dow, stocks end higher after Federal Reserve signals patience on future interest rate hikes
