Stocks Give Thumbs Up to Fed

Economists had forecast that GDP rose 3.1% last quarter, compared with a 3.8% rate in the second quarter.

Ian Shepherdson, chief economist with High Frequency Economics, said that while the third-quarter number is positive on first blush, the market should expect fourth-quarter GDP to come in below a 2% clip.

"[The] key point here, though, is that things look very different in fourth-quarter post-turmoil," he said. "Residential investment plunged 20.1%. [The fourth quarter] will be worse."

Also on the economic front, the Census Bureau said that construction spending unexpectedly rose 0.3% last month, compared with estimates of a 0.4% decline. At the same time, the Chicago purchasing managers' index declined to a reading of 49.7 for October, falling from last month's 54.2. Any reading below 50 indicates contraction.

Earnings took a backseat to the Fed's rate decision, although several companies were reporting. Kraft Foods (KFT Quote) posted a third-quarter profit that dropped 20% from a year ago. Still, Kraft beat estimates once charges were stripped out. Kraft gained 81 cents, or 2.5%, to $33.41.

Alcatel-Lucent (ALU Quote) posted a quarterly loss and trimmed its outlook. The company also replaced its financial chief and said it would cut 4,000 more jobs, sending the stock higher by 30 cents, or 3.2%, to close at $9.69.

Elsewhere, Clorox (CLX Quote) reported a fiscal first-quarter profit that topped expectations, and Jones Apparel (JNY Quote) blew away estimates with its third-quarter report. Shares of Clorox ended up $1.57, or 2.6%, to $62.57. Jones Apparel jumped $1.24, or 6.3%, to $20.94.

Away from earnings, Google (GOOG Quote) crossed the $700-a-share level for the first time ever. The Internet search giant rose $12.23, or 1.8%, to $707, the best close in its three-year history in the public markets.

Overseas markets were mostly higher. London's FTSE 100 added 0.9%, the Paris CAC 40 was up 0.8%, and Germany's Xetra Dax was 0.5% higher. In Asia, Japan's Nikkei 225 added 0.5% overnight, while Hong Kong's Hang Seng eased 0.9%.