Stocks edged higher Wednesday after the Federal Reserve reassured investors it was in no rush to raise interest rates from historically low levels.
The central bank said that the economy is strengthening, but not enough for policymakers to signal an imminent rate hike. The Fed’s benchmark rate has remained near zero for more than six years to bolster the economy and encourage borrowing, lending and investment.
Surging stocks and ultra-low rates have gone hand-in-hand during the past six years, pushing the market to all-time highs.
“This makes the market feel more confident,” said Alan Rechtschaffen, financial adviser at UBS Wealth Management Americas.
As the economy has recovered, investors have been trying to gauge not only when the Fed will begin raising rates but also how aggressively it will move. Investors worry that if rates climb too quickly, the economy will slump.
The Dow Jones industrial average gained 31.26 points, or 0.17 percent, to 17,935.74. The Standard & Poor’s 500 index rose 4.15 points, or 0.2 percent, to 2,100.44. The Nasdaq composite rose 9.33 points, or 0.2 percent, to 5,064.88.
Bond prices also rose after the Fed released its statement at 2 p.m. Eastern time. The yield on the 10-year Treasury note fell to 2.31 percent from 2.38 percent just before the statement was released.
Fed Chair Janet Yellen told reporters after a two-day policy meeting that the central bank needs to see more gains in employment and stronger signs of inflation before raising rates.
She didn’t provide a timetable for an increase, but most economists expect the Fed to move later this year.
Utilities gained the most of the 10 sectors in the S&P 500. Investors buy the dividend-rich stocks to provide them with an income. Low rates make them look attractive compared to bonds.
The major stock indexes remain close to their record highs set in May but have sagged in the past month as investors have focused on the outlook for rates.
