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Stocks Strong as Fed Stays Put

The major indices gain more than 1% after the FOMC statement contains no surprises. Gregg Greenberg reviews the day in The Real Story video (above).

(Updated with stock prices)

An anxiously awaited statement following the Fed's policy-making meeting elicited what one market observer called "a collective yawn," but stocks still held onto a good portion of the day's gains.

Although off their highs of the session, the

Dow Jones Industrial Average

added 120.16, or 1.3%, to 9361.61, and the

S&P 500

up 11.46 points, or 1.2%, to 1005.81. The

Nasdaq Composite

edged up 28.99 points, or 1.5%, to 1998.72.

As expected, the Federal Open Market Committee didn't change the

Fed's key interest rate

. The committee said the economy is likely to remain weak "for some time" but is showing signs of leveling. As for its plans to buy up to $300 billion in long-term government securities, the committee said it will slow or extend the program but expects the full amount will be purchased by October.

"The substance of content is largely unchanged and the deceleration of the monetization of debt was largely expected and understood," said Lawrence Creatura, portfolio manager at Federated Clover Capital Advisors. "It was completely consistent, so the market has greeted it with a collective yawn."

Jitters about the Fed announcement had negatively affected stocks earlier in the week, but a slate of earnings particularly in tech and housing lifted the mood Wednesday.

(Click below to hear Jim Paulsen, chief investment strategist for Wells Capital Management, talk about how excessive fear in policy and the business, consumer and investment sectors may actually be an asset to the market.)

TheStreet Recommends

The world's largest chip-equipment maker,

Applied Materials

(AMAT) - Get Applied Materials, Inc. Report

,

topped results

and offered a better-than-expected outlook, adding some oomph to tech stocks. Shares rose 3.3% to $13.66.

Meanwhile, home stocks got a boost as

Toll Brothers

(TOL) - Get Toll Brothers, Inc. Report

-- up 14.4% at $23.42 -- released better-than-expected earnings and reported the first year-over-year

rise in home orders

in four years, and the National Association of Realtors reported a 7% increase in home prices between the first and second quarters as well as an increase in sales.

Traveler's

(TRV) - Get Travelers Companies, Inc. Report

was among the better performers on the Dow, rising 3.3% to $46.43, after Standard & Poor's lifted its credit rating, while fellow insurer

Allstate

(ALL) - Get Allstate Corporation Report

gained 6% after Bank of America upgraded it to buy.

Among the other movers, retailer

Macy's

(M) - Get Macy's Inc Report

, which also lifted its outlook, added 6% to $16.40.

Adding some optimism to the market, analysts surveyed by Bloomberg lifted their estimates for economic growth in the U.S., predicting the economy will expand by 2% or more in four consecutive quarters.

Early in the day, the Commerce Department released figures that showed the June trade deficit widened by $1 billion in June to $27 billion, compared with $26 billion in May. Economists had expected a wider deficit of $28.7 billion.

A Treasury auction, in which the government sold $23 billion in ten-year notes, also wrapped up Wednesday afternoon. The offering had a bid-to-cover ratio, an indication of demand, of 2.49, roughly in line with a recent average of 2.48.

In other news,

Microsoft

(MSFT) - Get Microsoft Corporation Report

and

Nokia

(NOK) - Get Nokia Oyj Report

announced an alliance

on August 12, 2009, to offer Office software on new devices to better compete with

Apple

(AAPL) - Get Apple Inc. Report

,

Google

(GOOG) - Get Alphabet Inc. Class C Report

and

Research In Motion

(RIMM)

.

Microsoft added 1.7% to $23.53, while Nokia tacked on 0.8% to $13.19.

Also,

American International Group

(AIG) - Get American International Group, Inc. Report

said it

will sell

its Hong Kong consumer finance operations to China Construction Bank Asia for $70 million cash, plus the repayment of debt and deposits of about $557 million. AIG shares added 1.7% to $25.33.

Stocks abroad were mixed with Frankfurt's DAX and London's FTSE 100 up 1.2% and 1%, respectively. In Asia, Hong Kong's Hang Seng and Japan's Nikkei pulled back 3.03% and 1.42%, respectively, during their session.

As for commodities, crude oil futures gained 71 cents to $70.16 a barrel and gold edged up $4.90, to $952.50.

Longer-dated Treasuries were falling in price, rising in yield. The 10-year was down 13/32 to yield 3.72%, while the 30-year lost 1-16/32, yielding 4.53%.