NEW YORK: US stocks pushed higher on Wednesday, while Treasury yields fell and the dollar weakened, after the Federal Reserve raised interest rates for the second time in three months but did not flag any plan to accelerate the pace of monetary tightening.
The central bank's rate increase was spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank's target. Investors had widely expected the rate increase.
But the Fed's policy-setting committee did not flag any plan to accelerate the pace of monetary tightening. Although inflation is "close" to the Fed's 2-percent target, it noted that goal was "symmetric," indicating a possible willingness to allow prices to rise at a slightly faster pace.
"Lower rates, higher equities and a lower dollar all point to this being interpreted as more dovish than what was expected," said Randy Frederick, vice president Of trading and derivatives for Charles Schwab in Austin, Texas.
The Dow Jones Industrial Average rose 104.46 points, or 0.5 percent, to 20,941.83, the S&P 500 gained 18.29 points, or 0.77 percent, to 2,383.74 and the Nasdaq Composite added 40.50 points, or 0.69 percent, to 5,897.32.
Energy shares and defensive sectors such as utilities and real estate led gains.
MSCI's all-country world stock index climbed 0.9 percent.
"Markets are recognizing that while the Federal Reserve will raise interest rates three times this year there is not the risk that some were afraid of that they would move more aggressively based on what we have now," said Frances Donald, senior economist with Manulife Asset Management in Toronto.
The dollar fell 1 percent against a basket of key currencies and hit a five-week low against the euro.
US two- and three-year yields, which are most vulnerable to Fed policy, fell from multi-year highs touched during morning US trading.
Prices on benchmark 10-year Treasuries rose 24/32 to yield 2.508 percent, from 2.595 percent late on Tuesday.
Oil prices rose after six sessions of declines. US crude settled up 2.4 percent at $48.86 a barrel, after touching a three-month low a day earlier. Benchmark Brent settled up 1.8 percent to $51.81 a barrel.
Before the decision, crude had been lifted by a surprise drawdown in US crude inventories and data from the International Energy Agency suggesting OPEC cuts should create a crude deficit in the first half of 2017.
Earlier, the pan-European STOXX 600 index gained 0.4 percent, helped by energy and basic resource stocks .
Europe markets also focused on Dutch elections, where anti-EU firebrand candidate Geert Wilders is providing the latest test of anti-establishment and anti-EU sentiment.
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