(MCT) NEW YORK — U.S. stocks rose on Tuesday, propelling the S&P; 500 Index to a fresh 17-month high, after the Federal Reserve said it would keep its key interest rate low for an extended time, supporting a rally in financial shares.
“No surprise was the hallmark of the statement, including the dissent,” said Jim Dunigan, managing executive of investments at PNC Wealth Management.
The S&P; 500 Index added 8.95 points, or 0.8 percent, to 1,159.46, its highest finish since early October 2008. Natural-resource companies and financials led the gains that extended to all 10 of the index’s industry groups.
The Nasdaq Composite Index climbed 15.8 points, or 0.7 percent, to 2,378.01.
Zions Bancorp and Citigroup Inc. fronted gains among banks after the Federal Reserve kept rates near 0 percent and reiterated that low rates remain necessary, despite a recovering economy.
While the Fed was widely expected to keep its target rate for overnight loans between zero and 0.25 percent, analysts combed the central bank’s accompanying policy statement for clues as to the timing of future rate-increase moves.
Any differences in the Fed’s wording that signaled the central bank would raise rates sooner rather than later could have sparked selling of equities, given that higher rates translate to increased borrowing costs and typically hinder economic growth.
“At this point, the economic recovery is still somewhat suspect. As we start adding jobs, that will change,” said Dunigan.
The sole objector, Thomas Hoenig, president of the Kansas City Federal Reserve Bank, dissented to the “extended period” phrasing for a second consecutive meeting.
“With the information in hand as of right now, the Fed is likely to alter its language somewhat at the upcoming Fed meeting,” said Dan Greenhaus, chief economic strategist at Miller Tabak. “This position is, of course, open to change,” he said.
Strengthening in the final 30 minutes of trade, the Dow Jones industrial average extended its winning run to a sixth consecutive session. The blue-chip average rose 43.83 points, or 0.4 percent, to 10,685.98, with 23 of its 30 components advancing, led by General Electric Co. Its shares gained 4.5 percent after the company’s CFO said he expects the conglomerate’s earnings and dividend to climb next year.
Also boosting the Dow, Intel Corp. rose 4 percent after the technology bellwether released its newest server chips.
