By Kate Gibson
U.S. stocks rose on Tuesday, propelling the S&P 500 Index to
a fresh 17-month high, after the Federal Reserve said it would keep
its key interest rate low for an extended time, supporting a rally
in financial shares.
"No surprise was the hallmark of the statement, including the
dissent," said Jim Dunigan, managing executive of investments at
PNC Wealth Management.
The S&P 500 Index (SPX) added 8.95 points, or 0.8%, to
1,159.46, its highest finish since early October 2008.
Natural-resource companies and financials led the gains that
extended to all 10 of the index's industry groups.
The Nasdaq Composite Index (RIXF) climbed 15.8 points, or 0.7%,
to 2,378.01.
Zions Bancorp (ZION) and Citigroup Inc. (C) fronted gains among
banks after the Fed kept rates near 0% and reiterated low rates
remain necessary, despite a recovering economy.
While the Fed was widely expected to keep its target rate for
overnight loans between zero and 0.25%, analysts combed the central
bank's accompanying policy statement for clues as to the timing of
future rate-hike moves.
Any differences in the Fed's wording that signaled the central
bank would hike rates sooner rather than later could have sparked
selling of equities, given that higher rates translate to increased
borrowing costs and typically hinder economic growth.
"At this point the economic recovery is still somewhat suspect,
as we start adding jobs that will change," said Dunigan.
The sole objector, Thomas Hoenig, president of the Kansas City
Federal Reserve Bank, dissented to the 'extended period' phrasing
for a second consecutive meeting. .
"With the information in hand as of right now, the Fed is likely
to alter its language somewhat at the upcoming Fed meeting," said
Dan Greenhaus, chief economic strategist at Miller Tabak. "This
position is, of course, open to change," he added.
GE, Intel boost Dow
Strengthening in the final 30 minutes of trade, the Dow Jones
Industrial Average (DJI) extended its winning run to a sixth
consecutive session. The blue-chip average rose 43.83 points, or
0.4%, to 10,685.98, with 23 of its 30 components advancing, led by
General Electric Co. (GE). Its shares gained 4.5% after the
company's CFO said he expects the conglomerate's earnings and
dividend to climb next year.
Also boosting the Dow, Intel Corp. (INTC) rose 4% after the
technology bellwether released its newest server chips.
On the New York Stock Exchange, advancers led decliners nearly
3-to-1, with composite trading volume topping 4.5 billion
shares.
Declining dollar
The dollar weakened against the euro after S&P opted not to
downgrade Greece, a step the rating agency last month warned was
under consideration.
Ahead of Tuesday's open, the Commerce Department reported
new-home construction fell 5.9% to a seasonally adjusted annual
rate of 575,000. The January count was revised up to a pace of
622,000 units.
In a separate report, the Labor Department said the price of
imports declined 0.3% in February, the first drop in seven
months.
A standout among retailers was Limited Brands Inc. (LTD), shares
of which rose 4.2%. The company declared a special dividend of $1 a
share and said it would repurchase up to $200 million in stock.
The dollar's slide against the euro and other major currencies
boosted commodities including gold and oil, making them less costly
to foreign buyers. and
Shares of natural-resource companies also rose, with Cliffs
Natural Resources Inc. (CLF) up 4.9% and Newmont Mining Corp. (NEM)
gaining 3.2%.