NEW YORK (AP) — U.S. stocks rose on Wednesday after Federal Reserve policymakers voted to keep interest rates unchanged and gave no indication that a rate rise was imminent. A modest rebound in Chinese stocks also helped push the market higher.
The Dow Jones industrial average rose 121.12 points, or 0.7 percent, to 17,751.39. The Standard & Poor's 500 index rose 15.32 points, or 0.7 percent, to 2,108.57 and the Nasdaq composite rose 22.53 points, or 0.4 percent, to 5,111.73.
The Fed said the U.S. economy continues to improve in numerous aspects, but signaled that it wants to see further economic gains and higher inflation before raising rates. Many investors expect the Fed will still lift rates in September or December, but its statement gave no timing for the raise.
Low interest rates have been good for stock investors, helping fuel a bull market that has lasted more than six years.
"Yeah, the economy is improving, but they are not really saying that the economy is taking off here," said Tom di Galoma, head of rates trading at ED&F Man Capital. "If the Fed doesn't raise rates in September, I think we're looking at some time mid next year."
There are several reasons why the Fed could stand pat on interest rates, from the recent distress in China's stock market to the falling prices of commodities this year, which will help keep a lid on inflation.
Bond investors seemed to agree with the idea that the Fed was in no rush to raise rates. Bonds rose, pushing the benchmark 10-year Treasury note traded at a yield of 2.27 compared with the nearly 2.30 percent before the Fed statement.
Investors had a second day of relative calm in the Chinese stock market. China's Shanghai Composite Index rebounded 3.4 percent to close at 3,969.40 after flitting between gains and losses for most of the day. Alarm over the sharp fall in Chinese shares has abated somewhat as the Shanghai index has steadied following Monday's 8.5 percent dive.
A strong batch of corporate earnings also helped lift the market. Gilead Sciences rose $2.64, or 2.3 percent, to $115.71. The company's profits jumped 23 percent from a year ago, helped by its new blockbuster hepatitis C medicine Harvoni. The company also raised its 2015 forecasts.
Northrop Grumman led defense companies higher after it posted a stronger-than-expected profit in the second quarter and raised its outlook for the year. Northrop's stock jumped $10.10, or 6.2 percent, to $173.44, its biggest one-day gain in at least five years.
In other markets, the price of U.S. crude rose Wednesday after the government reported a surprise drop in oil inventories and oil production. Benchmark U.S. crude rose 81 cents to close at $48.79 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 8 cents to close at $53.38 in London.
In other futures trading on the NYMEX, wholesale gasoline rose 1.9 cents to close at $1.822 a gallon. Heating oil fell 0.6 cent to close at $1.598 a gallon. Natural gas rose 6.5 cents to close at $2.886 per 1,000 cubic feet.
The euro fell to $1.0989 from $1.1068. The dollar rose to 123.94 Japanese yen from 123.57 yen.
Precious and industrial metals futures ended mixed. Gold fell $3.60 to $1,092.60 an ounce, silver rose 10 cents to $14.73 an ounce and copper edged up less than a penny to $2.41 a pound.