NEW YORK — The stock market Wednesday got the reassurance it wanted from the Federal Reserve.
The U.S. central bank signaled that it would keep its short-term interest rate near zero for a while yet, and investors pushed the Dow Jones industrial average to a record high. Low rates have been a boon to the market by helping stimulate the economy and making stocks a more attractive investment than bonds.
“The Fed is not going to take the punch bowl away,” said Brad McMillan, chief investment officer for Commonwealth Financial. “They didn’t want to spook the market.”
Major indexes drifted before the Fed released a statement at 2 p.m. Eastern time signaling little change in its interest rate policy. Stocks in all three U.S. major indexes rose. The gains were small, but broad. Seven of the 10 industry groups of the Standard & Poor’s 500 index rose, led by materials stocks.
In its statement after a two-day policy meeting, the central bank retained language that it plans to keep short-term rates at a record low for “a considerable time” after it ends its monthly bond purchases in November. Many investors interpret that to mean the first hike won’t come until the middle of next year.
The Dow gained 24.88 points, or 0.2 percent, to end at 17,156.85 — its 16th record high this year. The S&P 500 edged up 2.59 points, or 0.1 percent, to 2,001.57, falling short of its own closing high of 2,007.71 from Sept. 5.
The Nasdaq composite finished higher by 9.43 points, or 0.2 percent, to 4,562.19, still well below its dot-com era peak.
Shares of homebuilders jumped after an index of builder confidence for new homes rose to its highest level in nearly nine years. Lennar Corp. rose nearly 6 percent, the most in the S&P 500 index.
The S&P 500 has risen 8 percent in 2014, extending the bull market into a sixth year. Companies have been hiring at a solid pace and manufacturing and construction have picked up.
John Lynch, regional chief investment officer for Wells Fargo Private Bank, said the stronger economy is a big reason that stocks have risen.
“The economy is tracking at a 3 percent rate of growth, and corporate profits are at a record level,” he said, shortly before the Dow’s record close.
But the good developments have also worried the market because they could prompt the Fed to raise interest rates fast to head off inflation.
On Wednesday, at least, those concerns eased. Even before the Fed policy statement, there was news that inflation remained tame. U.S. consumer prices edged down in August, the first monthly drop since the spring of 2013, the government said.
