U.S. stocks climbed Wednesday as investors were relieved that the Federal Reserve once again left interest rates unchanged. That sent dividend-paying stocks higher, while energy companies jumped with the price of oil.
Stocks made a big gain after the Fed’s decision, which ended about weeks of confusion for investors. With the central bank confirming it will raise interest rates slowly, bond yields dropped and utility and phone companies rose. The price of oil rose after the U.S. government said energy stockpiles shrank last week.
The Dow Jones industrial average added 163.74 points, or 0.9 percent, to 18,293.70. The Standard & Poor’s 500 index picked up 23.36 points, or 1.1 percent, to 2,163.12. The Nasdaq composite rose 53.83 points, or 1 percent, to a record 5,295.18.
Oil prices jumped as fuel stockpiles shrank and investors hoped that supply gluts are easing, which would allow prices to rise. The Energy Information Administration said oil inventories dropped by 6.2 million barrels and gasoline inventories decreased by 2.5 million barrels last week.
S&P Global Platts says analysts expected oil inventories to grow and gasoline stockpiles to shrink by a smaller amount.
Benchmark U.S. crude added $1.29, or 2.9 percent, to $45.34 a barrel in New York. Brent crude, used to price international oils, rose 95 cents, or 2.1 percent, to $46.83 a barrel in London. That helped energy companies, and Anadarko Petroleum rose $2.78, or 4.8 percent, to $61.06 while Chevron added $1.93, or 2 percent, to $99.63.
The Federal Reserve said the economy has gotten a bit stronger after some shaky results in the spring, and that the argument for raising interest rates has also gotten stronger. However the central bank said it wants to see more improvement in the job market before raising rates.
The Fed raised interest rates in December and hasn’t made another move since. The benchmark interest rate was cut to zero in late 2008 and at its current pace it will take years for rates to get back to pre-financial crisis levels.
The Dow was up about 30 points before the Fed’s decision was announced. The ruling boosted dividend-paying companies while bond prices changed course and moved higher. The yield on the 10-year Treasury note fell to 1.66 percent from 1.69 percent.
Japan’s central bank said it will continue trying to stimulate the Japanese economy until inflation is higher than 2 percent a year, but it didn’t reduce interest rates any further. Some analysts thought the central bank would take further steps to bolster economic growth, which would have weakened the yen. The dollar fell to 100.44 yen from 101.84 yen.
In other energy trading, wholesale gasoline rose 3 cents, or 2.5 percent, to $1.40 a gallon. Heating oil added 2 cents, or 1.7 percent, to $1.43 a gallon. Natural gas gained 1 cent to $3.06 per 1,000 cubic feet.
The euro rose to $1.1180 from $1.1157.
Gold rose $13.20, or 1 percent, to $1,331.40 an ounce. Silver gained 49 cents, or 2.5 percent, to $19.77 an ounce. Copper fell 1 cent to $2.16 a pound.
Germany’s DAX rose 0.4 percent and the FTSE 100 of Britain added 0.1 percent. France’s CAC 40 climbed 0.5 percent. Tokyo’s Nikkei 225 reversed an early loss and closed 1.9 percent higher. The Hang Seng of Hong Kong gained 0.6 percent and South Korea’s Kospi rose 0.5 percent.