The US Federal Reserve held its key target interest rate at near zero and reiterated its commitment to keeping money cheap "for an extended period."The decision, while expected, immediately boosted the stock market, which rose for the sixth stra
The US Federal Reserve held its key target interest rate at near zero and reiterated its commitment to keeping money cheap "for an extended period."
The decision, while expected, immediately boosted the stock market, which rose for the sixth straight day.
The Dow Jones Industrial Average closed 43.83 points higher, or 0.4%, at 10,685.98. This extended the index's rise in the past six sessions to 1.3% – the longest rally this year.
Meanwhile, the Fed also said it would end one of its main support programmes for the US economy—purchases of $US1.25 trillion of mortgage backed securities—pushing a nascent recovery to stand with less government support.
Rates on 30-year mortgages have fallen to around 5.05% from 5.28% at the start of the year, which is when the Fed began to slow down its weekly purchases.
The Fed has also wound down its emergency lending programmes, The Term Asset-Backed Securities Loan Facility, or Talf, is slated to close by June.
"The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability," the Federal Open Market Committee said in its statement, indicating it stands ready to resume the purchases if the recovery starts to flag.
Corporate news also buoyed stocks.. Intel surged 4% after the chip maker launched its new Xeon chip and General Electric rose 2.8% after its chief financial officer said the conglomerate expects to raise its dividend next year.
Home Depot dropped 0.6% after a decline in housing starts. Boeing fell 0.6% after Air Berlin said it had reduced its aircraft orders. Caterpillar was also weak, down 0.4%.
The Nasdaq Composite finished up 0.7% at 2378.01. The S&P 500 index was up 0.8% to 1159.46 with its materials sector leading the climb as commodity price rose on a lower US dollar.
Other markets
European stocks rose as investors welcomed further progress on the Greek debt crisis ahead of the US Federal Reserve's interest rate announcement.
Equity markets hardly moved on the March ZEW economic sentiment survey out of Germany, which came in just above forecasts, or confirmation that euro-zone inflation rose 0.3% in February and 0.9% on the year.
The Stoxx Europe 600 Index was up 0.6% at 258.2. London's FTSE 100 was up 0.3% at 5612.2, although off its initial highs. Frankfurt's DAX was 0.7% higher at 5945.9 and Paris' CAC-40 was 0.8% higher at 3921.7.
Asian markets were mixed. Japanese stocks fell as exporters retreated after a series of strong performances over the past few days, while coal miners extended their drop in Hong Kong after China Shenhua Energy's weaker-than-expected earnings last week.
In Tokyo, the Nikkei Stock Average of 225 companies lost 0.3% to 10721.71, snapping a three-session winning streak. Among exporters, Canon lost 1.3% and Honda Motor dropped 1.5%.
The Bombay Stock Exchange's Sensitive Index rose 1.3% to 17383.18, its highest close since January 20, spurred by gains in Reliance Industries, metals and autos.
Reliance Industries jumped 3.8% to a near-two-month high on hopes of strong fourth-quarter results driven by improving refining margins. Aluminum producer Hindalco Industries rose 2.4%.
Australia's S&P/ASX 200 gained 0.3% to 4797.25, supported by mining stocks. BHP Billiton inched up 0.4% and Rio Tinto edged 0.2% higher.
Commodities: Oil, gold up
Crude futures were sharply higher, moving above $US82 a barrel briefly, as traders reacted to the Fed keeping interest rates unchanged.
Light, sweet crude for April delivery settled $US1.90, or 2.4%, higher at $US81.70 a barrel in New York, after trading at a peak $US82.04.
Brent crude on the ICE futures exchange settled $US1.13, or 1.5%, higher at $US79.02 a barrel.
Gold futures moved sharply higher as traders squared up positions ahead of the Fed announcement.
April gold settled $US17.10, or 1.5%, higher at $US1122.50 an ounce in New York. It reached as high as $US1127.
Currencies: Dollar down; euro, yen up
The dollar slumped after the Fed delivered a cautious assessment of the US economic recovery, discouraging hopes it will raise interest rates anytime soon.
The euro, which had already rallied as Greece’s credit ratings were confirmed, extended its gains after the no-change interest rate announcement.
The pound gained 1.3%, while the yen reversed direction and also moved into positive territory.
The Canadian dollar hit a series of 20-month highs after the Fed meeting. At $C1.0139, the US dollar was near parity with its Canadian counterpart.
The euro was at $US1.3776 from $US1.3670 late on Monday. The dollar was at ¥90.22 from ¥90.48, while the euro was at ¥124.31 from ¥123.69.
The pound was at $US1.5256 from $US1.5049.
