Investing.com - U.S. stocks rose on Wednesday after the Federal Reserve said it would likely close its bond-buying program in October but stressed benchmark interest rates would remain low for some time afterwards to ensure the economy continues to strengthen.
At the close of U.S. trading, the Dow 30 rose 0.15% to a record-high 17,156.85, the S&P 500 index rose 0.13%, while the NASDAQ Composite index rose 0.21%.
The Volatility S&P 500 index, which measures the outlook for market volatility, was down 0.86% at 12.62.
The Federal Reserve said earlier it was leaving its benchmark interest rate unchanged at 0.00-0.25% and added it would likely close its monthly bond-buying program in October.
Prior to Wednesday's policy statement, the Fed was buying $25 billion in Treasury debt and mortgage-backed securities a month to stimulate the economy, a monetary policy tool known as quantitative easing that aims to suppress long-term interest rates, boosting stock prices as a side effect.
The Fed decided earlier to trim that figure to $15 billion and will likely close it at its Oct. 28-29 meeting, though stocks rose on language viewed by markets as less-hawkish by some and dovish by others that reminding markets that rates won't rise until the Fed is comfortable with the economy's recovery.
"On balance, labor market conditions improved somewhat further; however, the unemployment rate is little changed and a range of labor market indicators suggests that there remains significant underutilization of labor resources," the Fed said in its statement.
"It likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored."
Markets have interpreted the phrases "considerable time" and "underutilization of labor resources" as hints that policy may remain looser for longer than expected, and stocks rose on news that borrowing costs will stay low even as the economy rises.
Leading Dow Jones Industrial Average performers included Dupont Fabros Technology Inc (NYSE:DFT), up 5.20%, Home Depot Inc (NYSE:HD), up 1.06%, and Pfizer Inc (NYSE:PFE), up 0.95%.
The Dow Jones Industrial Average's worst performers included Caterpillar Inc (NYSE:CAT), down 0.82%, Visa Inc (NYSE:V), down 0.75%, and Microsoft Corporation (NASDAQ:MSFT), down 0.52%.
European indices, meanwhile, ended the day largely higher.
After the close of European trade, the DJ Euro Stoxx 50 rose 0.54%, France's CAC 40 rose 0.50%, while Germany's DAX rose 0.30%. Meanwhile, in the U.K. the FTSE 100 fell 0.17%.
On Thursday, the U.S. is to produce a flurry of economic data, including reports on initial jobless claims, building permits, housing starts and manufacturing activity in the Philadelphia region.