Investors applaud central bank's decision
NEW YORK — The stock market got the reassurance it wanted from the Federal Reserve on Wednesday.
The central bank signaled that it would keep its short-term interest rate near zero for a while yet, and investors pushed the Dow Jones industrial average to a record high.
“The Fed is not going to take the punch bowl away,” said Brad McMillan, chief investment officer for Commonwealth Financial. “They didn't want to spook the market.”
Major indexes drifted before the Fed released a statement at 2 p.m. signaling little change in its interest rate policy. Stocks in all three major indexes rose. The gains were small but broad. Seven of the 10 industry groups of the Standard & Poor's 500 index rose, led by materials stocks.
The Dow gained 24.88 points, or 0.2 percent, to end at 17,156.85 — its 16th record high this year. The S&P 500 edged up 2.59 points, or 0.1 percent, to 2,001.57, falling short of its closing high of 2,007.71 from Sept. 5.
The Nasdaq composite finished higher by 9.43 points, or 0.2 percent, to 4,562.19, well below its dot-com era peak.
Shares of home builders jumped when an index of builder confidence for new homes rose to its highest level in nearly nine years. Lennar Corp. rose nearly 6 percent, the most in the S&P 500 index.
The S&P 500 has risen 8 percent in 2014, extending the bull market into a sixth year. Companies have been hiring at a solid pace and manufacturing and construction have picked up.
John Lynch, regional chief investment officer for Wells Fargo Private Bank, said the stronger economy is a big reason that stocks have risen.
“The economy is tracking at a 3 percent rate of growth, and corporate profits are at a record level,” he said, shortly before the market's close.