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Stocks Advance as Fed Soothes

NEW YORK ( TheStreet) -- Stocks advanced Wednesday after the Federal Open Market Committee's statement suggested a stabilizing economy and said it would keep rates near zero for an "extended period," as expected.

Aside from a tone that was mildly more upbeat in its discussion of economic conditions than recent releases, the statement from the Federal Reserve's rate-setting arm contained only one key surprise: one of the body's members, Kansas City Fed Chief Thomas Hoenig, dissented from the otherwise unanimous vote, saying he believed the economy had improved enough that expecting interest rates to remain close to zero for an extended period "was no longer warranted."

The Dow Jones Industrial Average closed up 42 points, or 0.4%, at 10,236. The S&P 500 gained 5 points, or 0.5%, to 1098, while the Nasdaq finished 18 points higher, or 0.8%, at 2221.

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"Markets have rallied since the announcement, and honestly, I'm surprised. I really expected markets to trade exactly as they had prior to the announcement," said Mike Shea, a managing partner at Direct Access Partners. "I've heard there's a little bit of prudent short-covering, but largely, I think it's based on the fact that the statement, while almost the same as the last one, does present something of a steadying tone. It suggests things are stablizing.

"I also thinks it's not to be discounted that Apple (AAPL - Get Report) announced pricing at the same time," Shea said, pointing to a pop in Apple shares following CEO Steve Jobs' announcement that its new iPad device will be available at the end of March for $500 to $830. Shares added $2.04, or 1%, to close at $207.98.
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Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

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