Updated from 3:19 p.m. EDT
Stocks in the U.S. rallied sharply Tuesday as a selloff in oil prices, a better-than-expected report on the services sector and a positive reaction to the latest
comments sent the major averages soaring.
Dow Jones Industrial Average
surged 331.62 points to 11,615.77, and the
jumped 35.87 points to 1284.88. The
climbed 64.27 points to 2349.83. All advanced more than 2.8%.
The market was strong all day, and the gains swelled after the Federal Open Market Committee said it would hold its target for the fed funds rate at 2%. Though the economy grew in the second quarter, labor markets have softened and "financial markets remain under considerable stress," the Fed said in a statement.
"Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth," the comments continued.
The Fed also said that while inflation has been a concern, it expects price increases to moderate later this year and next year, but that the outlook is "highly uncertain."
Meanwhile, crude oil continued falling, shedding $2.24 a barrel to $119.17. Oil earlier slid to a point where it last sat at the start of May, and it has now decreased almost $30 since it approached $148 a barrel less than a month ago.
United States Oil
, an ETF that tracks crude prices, was down 2%.
Also helping was the Institute for Supply Management's index on the services sector of the economy, which climbed to 49.5 last month from 48.2 in June. Analysts were looking for a reading of 49. Additionally, the ISM's prices paid measure dropped from its record level the previous month.
As for corporate earnings,
Procter & Gamble
, a component of the Dow, topped profit and revenue estimates and said its first-quarter results should be in line with expectations.
had a quarterly loss, though its revenue, despite sinking more than 40% from last year, matched analysts' targets.
both exceeded expectations, while
Archer Daniels Midland
had a surge in revenue and easily surpassed forecasts.
Among notable analyst actions, UBS initiated
with a buy rating and a $195 price target, and Merrill Lynch downgraded
to underperform from neutral.
On the fixed-income side, Treasury prices were lower. The 10-year note was down 9/32 in price, yielding 4%, and the 30-year bond was off 17/32, yielding 4.62%. The dollar was mixed against its main competitors.
Major markets in Asia were weaker during the prior session, but Europe's bourses were uniformly stronger.
This article was written by a staff member of TheStreet.com.