Updated from 4:10 p.m. EDT
With no surprises emanating from the
meeting, stocks closed higher Wednesday as traders cheered the earnings reports from
Dow Jones Industrial Average
rose 72.28 points, or 0.63%, to 11,613.19 and is about 110 points from its all-time high reached in January 2000. The
added 6.87 points, or 0.52%, to 1325.18 and was at its best level in more than five years. The
surged 30.52 points, or 1.37%, to 2252.89.
About 2.37 billion shares changed hands on the
New York Stock Exchange
. Advancers beat decliners by a 2-to-1 margin. Volume on the Nasdaq was 2.19 billion shares, and winners led losers 4 to 3.
The Federal Open Market Committee decided to keep its federal funds target unchanged at 5.25% for the second straight meeting, an outcome that had been widely expected on Wall Street.
Along with the rate increase, the FOMC said in a statement that recent indicators showed that "the moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market."
However, "inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand," the statement said.
The FOMC reiterated its views on the possibility of further hikes, saying that "the extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."
Once again there was a dissenting vote, with Richmond Fed President Jeffrey Lacker preferring a rate increase of 25 basis points.
"The small shifts in the language are marginally more dovish than last time, but there is no attempt here to induce any significant change in market expectations," said Ian Shepherdson, chief economist with High Frequency Economics. "It was always too soon to expect a clear hint of a serious change in the direction of the FOMC. That will come at the end of the year as the housing market deteriorates further and industry finally begins to slow too."
Paul Nolte, director of investments with Hinsdale Associates, said investors are excited with the idea that the Fed may actually stand aside for the remainder of the year. "The bond model
is still pointing to lower rates in the future. However, concerns are beginning to creep into the markets about the oil decline."
After the Fed's announcement, the benchmark 10-year Treasury was up 1/32 in price to yield 4.73%. Prices and yields move in opposite directions.
The dollar advanced against the euro and the Thai baht after a military coup against Thailand's Prime Minister Thaksin Shinawatra. The coup took place while the prime minister was in New York at the United Nations.
Crude futures, a day after sinking more than $2 a barrel, were down further, falling another $1.20 to close at $60.46 a barrel. Other energy prices were weaker, as well. Precious metals reversed early losses, and gold added $3 to $586.20 an ounce. Silver rose 20 cents to finish at $11.14 an ounce.
Meanwhile, Oracle's earnings, released after Tuesday's close, were contributing to an upbeat tone. The database giant saw its shares hit a five-year high after a quarterly report that beat Wall Street's profit estimates by 2 cents and had revenue growth of 30%. The stock jumped 11.2% to close at $17.93, its best closing level since August 2001.
Among Oracle's competitors,
finished higher by 2.4%,
added 1.9%, and
Investment bank Morgan Stanley posted fiscal third-quarter earnings of $1.85 billion, or $1.75 a share, on revenue totaling $7.99 billion. The Thomson First Call average estimate was for EPS of $1.37 on revenue of $7.82 billion. Shares rose 50 cents, or 0.7%, to close at $72.35.
said it had a second-quarter profit of $10 million, or 6 cents a share, up from $1.3 million, or a penny a share, a year ago. On a continuing operations basis, the electronics retailer earned 7 cents a share in the quarter. Sales rose to $2.84 billion from $2.56 billion a year earlier. Analysts had expected earnings of 5 cents a share on revenue of $2.82 billion. Still, the stock gave back 3 cents, or 0.1%, to $26.26.
tacked on 2.3%, after Circuit City said demand was strong for flat-screen TVs. The retail sector benefited, with the S&P Retail Index ending higher by 0.7%.
As for other sectors, the Philadelphia Oil Service Sector Index dropped 3.4%, and the Philadelphia Housing Sector Index slipped 0.5%. The Philadelphia/KBW Bank Sector Index rose 0.9%, the Amex Securities Broker/Dealer Index added 2%, and the Dow Jones Transportation Average tacked on 0.2%.
On Tuesday, stocks pulled back amid a weak housing report, a revenue warning from Internet giant
and some last-minute nervousness in advance of the Fed meeting.
Internet shares tumbled after Yahoo! Chief Financial Officer Susan Decker said the company's third-quarter revenue would probably be in the bottom half of its projected range. Yahoo!'s shares slumped 11.2% to close at $25.75.
The weakness spilled over into names such as
, which lost 2.6% to $403.81,
, down 3.5% to $25.95, and
, lower by 1.6% to $31.58.
Overseas, Europe's bourses were higher. London's FTSE rose 0.6% to 5866, and Frankfurt's Xetra DAX added 1.4% to 5954. Asia's shares were mixed following the coup in Thailand. Tokyo's Nikkei slid 1% to 15,719, but Hong Kong's Hang Seng rallied 0.9% to 17,513.