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US: Stocks rise as Fed keeps rate unchanged
[NEW YORK] Wall Street stocks rose on Wednesday after the US Federal Reserve kept its near-zero benchmark interest rate unchanged and Chair Janet Yellen pledged a methodical approach to raising rates.
The Dow Jones Industrial Average added 31.26 points (0.17 per cent) at 17,935.74.
The broad-based S&P 500 gained 4.15 (0.20 per cent) at 2,100.44, while the tech-rich Nasdaq Composite Index advanced 9.33 (0.18 per cent) to 5,064.88.
Equity markets moved into positive territory following the Federal Open Market Committee's decision to keep its benchmark fed funds rate in place.
While policy-makers predicted the rate will rise to above 0.5 per cent by year-end, the outlook for hikes beyond that was slower than before, and Ms Yellen herself said the economy and specifically the jobs market still has some weak points to surmount.
"The market views it as pretty dovish," Brent Schutte, market strategist at BMO Global Asset Management, said of Ms Yellen's comments.
"She emphasised more the slow and gradual pace... than the absolute start date, which was a way of telling the market 'we're going to continue to support it,'" he added.
Package delivery giant FedEx sank 3.0 per cent as it reported a loss of US$895 million for the quarter ending May 31 due to higher costs in its pension accounting, a writedown of aircraft assets and an increase in its legal reserves.
Software company Adobe Systems lost 2.5 per cent after reporting second-quarter net income of 48 cents per share, three cents above analyst expectations. Credit Suisse said the stock is already well-valued and that it will be watching to see if the company is able to raise prices on cloud computing subscriptions.
Online travel company TripAdvisor powered 14.7 per cent higher as it announced it was expanding a partnership with Marriott International that will let users make hotel reservations from its website. Marriott added 0.4 per cent.
Kythera Biopharmaceuticals bolted 22.1 per cent higher on news it reached a US$2.1 billion deal to be acquired by Botox-maker Allergan. Kythera is the maker of Kybella, an injectable drug to treat double chins.
Bond prices, after falling sharply ahead of the Fed announcement, rebounded to end just slightly lower from Tuesday.
The yield on the 10-year US Treasury rose to 2.32 per cent from 2.31 per cent, after hitting 2.40 per cent before the Fed release. The 30-year advanced to 3.09 per cent from 3.04 per cent. Bond prices and yields move inversely.