US stocks rose on Wednesday after the Federal Reserve's latest policy meeting ended without any unwelcome surprises, allowing investors to refocus on the solid outlook for corporate profits. Texas Instruments shares jumped 4.7 percent after the world's biggest maker of chips for mobile phones said it had raised its profit margin targets.
The Philadelphia Stock Exchange index of semiconductors rose 1.7 percent. IBM was the biggest boost to the Dow after a brokerage upgrade sent the company's stock up 1.1 percent. The Federal Reserve left benchmark interest rates unchanged and in its policy statement said the economy growing at a moderate pace, and that core inflation, while elevated, is likely to slow.
"The statement is a status quo and the Fed is in a holding pattern. The Fed is keeping a watchful, parental eye on the rate of inflation, and the rate seems to be quite manageable," said Georges Yared, founder and chief investment strategist at Yared Investment Research in Wayzata, Minnesota.
"I think investors are reacting positively to the fact that the Fed didn't really rock the boat in this FOMC meeting and people are still focused on very good corporate earnings that came out of the first quarter," he said. Stocks have rallied in recent weeks on surprisingly strong first-quarter results, a steady flow of major take-over bids and share buybacks.
The Dow Jones industrial average gained 53.80 points, or 0.40 percent, to end at 13,362.87 - its 21st record closing high this year. The Standard & Poor's 500 Index rose 4.86 points, or 0.32 percent, at 1,512.58. The Nasdaq Composite Index was up 4.59 points, or 0.18 percent, at 2,576.34.
A sharp decline in oil prices boosted industrial conglomerates such as diversified manufacturer Honeywell International Inc and heavy construction and mining equipment-maker Caterpillar Inc.
Honeywell rose 1.8 percent to $56.81 while Caterpillar gained 1.8 percent to $74.75. Optimism about take-overs also buoyed stocks. The latest possible target, mining company Rio Tinto Plc, surged on speculation that larger rival BHP Billiton was planning a bid to create the world's fifth-largest company.
US-listed shares of Rio Tinto jumped 11.95 percent to $296.27 and New York-listed BHP Billiton stock was up 4.9 percent to $53.41, on the NYSE. Technology bellwether Cisco Systems Inc, was the biggest drag on both the S&P and the Nasdaq. The world's largest maker of equipment that directs Internet traffic, issued an outlook in line with forecasts, but analysts said investors had hoped for a surprise to the upside. Its shares slid 6.5 percent to close at $26.51.
Texas Instruments shares rose 4.7 percent to $36.83. Trading was light on the NYSE, with about 1.54 billion shares changing hands, below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 2.12 billion shares traded, above last year's daily average of 2.02 billion. Advancing stocks outnumbered declining ones by a ratio of about 2 to 1 on the NYSE and by 4 to 3 on the Nasdaq.
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