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US: Wall St rallies after Fed statement; S&P has best day this year

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[NEW YORK] The S&P 500 scored its best day since October 2013 on Wednesday as the Federal Reserve gave an upbeat assessment of the economy and said it would take a patient approach toward lifting interest rates.

The rally, which followed a three-day losing streak, was also driven by a 4.2 per cent gain in the S&P energy index .

Following a two-day meeting, the US central bank gave a strong signal that it was on track to raise interest rates sometime next year. The Fed statement came against a backdrop of solid domestic economic growth but trouble overseas. "This is the market saying, 'Ah, I get it,' the Fed does not want to be in the business of disruption, this is a steady monetary policy and the Fed will continue to be supportive of asset prices," said Scott Clemons, chief investment strategist at Brown Brothers Harriman Private Banking in New York.

Also supporting stocks, Fed Chair Janet Yellen it was not a major concern that some banks may be leveraged and exposed to oil price moves. US and Brent oil are down roughly 50 per cent since June.

The Dow Jones industrial average rose 288 points, or 1.69 per cent, to 17,356.87, the S&P 500 gained 40.15 points, or 2.04 per cent, to 2,012.89 and the Nasdaq Composite added 96.48 points, or 2.12 per cent, to 4,644.31.

All 10 S&P sector ended higher.

Shares of Exxon Mobil jumped 3 per cent to US$89.02. Energy shares have which has fallen sharply with the recent heavy selloff in oil prices.

Earlier in the day, data showed US consumer prices recorded their biggest drop in nearly six years in November as gasoline prices tumbled.

Shares of the Herzfeld Caribbean Basin Fund, a closed-end mutual fund listed on Nasdaq, hit a seven-year high as President Barack Obama announced a move to normalise relations between the United States and Cuba.

The fund, which holds stocks and assets that fund manager Thomas Herzfeld believes would benefit from an eventual end to the US economic embargo against Cuba, rose 28.9 per cent to US$8.78.

About 9.4 billion shares changed hands on US exchanges, above the 7.3 billion average this month, according to BATS Global Markets.

NYSE advancing issues outnumbered decliners 2,777 to 353, for a 7.87-to-1 ratio; on the Nasdaq, 2,214 issues rose and 545 fell for a 4.06-to-1 ratio.

REUTERS