Stocks surge as Fed rules out April interest rate hike
NEW YORK - Stocks soared after Federal Reserve officials suggested they are unlikely to raise interest rates before June at the earliest and lowered its year-end rate forecast.
Shortly before the close of trading, The Dow Jones industrial average rose 193 points, or 1.1 percent, to 18,042. The Standard & Poor's 500 gained 22 points, or 1.1 percent, to 2,096. The Nasdaq composite added 42 points to 4,980.
The Fed on Wednesday signaled it would soon start to raising interest rates for the first time since 2006. Most forecasters expect the first rate hike to come in June, although Fed Chair Janet Yellen emphasized that policy makers will monitor economic conditions before any more move to normalize rates.
In new estimates, the Fed also reduced the median for the federal funds rate at the end of 2015 to 0.625 percent, versus 1.125 percent in December.
While the central bank left open the possibility of a rate increase later in the year, it cut its forecasts for economic growth through 2017 from its December projections.
In a statement released at the end of a two-day meeting, the central bank also said that the U.S. unemployment rate can now fall further without spurring inflation. Investors had expected the Fed to signal that it was getting closer to raising rates for the first time in close to a decade as the unemployment drops and on tentative signs that wages are picking up.
That move could have led to a series of rate increases throughout the year. Bonds rallied, pushing the yield on the 10-year Treasury note below 2 percent. The dollar dropped against the euro and oil rebounded.