Stocks rose Wednesday afternoon after the Federal Reserve left interest rates unchanged and forecast that it will raise rates more gradually than it had envisioned late last year. That was a relief to investors, who quickly sent stocks higher. Energy companies climbed with the price of oil.
At the close on Wall Street, the Dow Jones industrial average was up 74.2 points, about 0.4 percent, at 17,325.8. The Standard & Poor’s 500 index gained 11.3 points, about 0.6 percent, to 2,027.2. The Nasdaq composite added 35.3 points, about 0.8 percent, to nearly 4,764.
CRUDE ENERGY: About the same time, benchmark U.S. crude was up $2.11, about 5.8 percent, to $38.45 a barrel in electronic trading on the New York Mercantile Exchange. It fell 84 cents to $36.34 on Tuesday. In London, Brent crude, the benchmark used to price international oils, gained $1.54, about 4 percent, to $40.28 per barrel.
FED’S MOVE: The Fed’s Open Market Committee left the benchmark interest rate unchanged, saying the U.S. economy continued to grow, but global economic and financial turmoil pose risks. Fed officials now expect to raise interest rates two times this year instead of four times. The Fed raised the short-term rate it controls in December from nearly zero for the first time in almost a decade.
THE QUOTE: Boosts in interest rates tend to slow down economic growth. Jeremy Zirin, chief equity strategist for UBS Wealth Management Americas, said investors are glad the Fed is backing off.
“It probably eases investors’ minds that we’re unlikely to see a rate hike in April and it probably takes June off the table,” he said. The Fed and the markets now seem to have the same view on interest rate increases, Zirin said, and that means the market may be a little less volatile.
CHINA FACTOR: China’s National People’s Congress wrapped up its ceremonial annual session with repeated reassurances that Beijing has the slowing economy under control but, as expected, without major policy changes. It is unclear if the event did much to dispel fears over the economy’s slowing momentum.