NEW YORK — A more upbeat Federal Reserve is reassuring investors that they’ve been making the right bets.
Stocks bounded higher Wednesday after the central bank said the economy appears to be “leveling out” rather than simply shrinking at a slower rate.
The Fed’s more positive take on the economy compared with its assessment in June wasn’t surprising, but it still bolstered hopes that the economy is in fact rebounding.
Wednesday’s advance restarted the market’s summer rally after a pause Monday and Tuesday. Major market indexes jumped more than 1 percent, including the Dow Jones industrial average, which climbed 120 points.
The Dow rose 120.16, or 1.3 percent, to 9,361.61. The Standard & Poor’s 500 rose 11.46, or 1.2 percent, to 1,005.81, while the Nasdaq composite gained 28.99, or 1.5 percent, to 1,998.72.
About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 1.2 billion shares, flat with Tuesday. Light volume can skew price moves.
Financial and technology shares posted some of the strongest gains after ratings upgrades and profit reports provided fresh evidence of a recovery.
Investors drew reassurance from policymakers’ comments.
“They did really endorse the fact that we’re moving into recovery, not searching for the bottom,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
Stocks have been rallying much of the past four weeks on expectations that the economy is strengthening.
The Fed also said it would slow the pace of its program to buy $300 billion worth of Treasury securities so that it will close at the end of October rather than September.
