NEW YORK -- U.S. stocks rose, with the Dow Jones Average closing at a record, as the Federal Reserve said it would continue to trim the pace of bond purchases as the economy gains momentum.
The Standard & Poor's 500 Index increased 0.3 percent to 1,883.91 at 4 p.m. in New York. The Dow gained 45.47 points, or 0.3 percent, to 16,580.84, topping the previous closing record reached Dec. 31. The Nasdaq Composite Index added 0.3 percent, after an earlier drop of 0.8 percent.
"The Fed seems to be putting aside the weakness in the first quarter that the market reacted to this morning," Walter Todd, who oversees about $975 million as chief investment officer at Greenwood Capital Associates LLC, said in a phone interview. "The statement seems business as usual, and perhaps if you'd seen the Fed react more dovish to a weaker first quarter, that would've been more negative."
The S&P 500 ended April with a 0.6 percent gain, its third straight monthly advance. The benchmark index Tuesday closed 0.7 percent away from its record reached April 2 as Internet stocks rallied for the first time in five days and results from Merck & Co. to Sprint Corp. topped estimates.
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The Fed said the economy is gaining momentum as consumers spend more, and said it would continue to trim the pace of bond purchases.
"Growth in economic activity has picked up recently, after having slowed sharply," the Federal Open Market Committee said in a state
ment following a meeting in Washington. "Household spending appears to be rising more quickly."
The committee pared monthly asset buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in "measured steps" are likely.
Fed Chair Janet Yellen is winding down record stimulus as the world's largest economy shows signs of rebounding from a first-quarter standstill. At the same time, the Fed repeated that it's likely to keep the benchmark interest rate near zero for a "considerable time" after bond purchases end.
"This announcement is really no news is good news. No surprises here," Kristina Hooper, a U.S. investment strategist at Allianz Global Investors in New York, said in a phone interview. The firm oversees $475 billion. "The market will have a positive reaction, might be muted, but it's positive because this announcement is more of the same in terms of underscoring that Fed is going to remain very accommodative."
Data on Wednesday showed the U.S. economy barely grew in the first quarter as harsh winter weather chilled investment and exports dropped. The expansion stalled even as consumer spending on services rose by the most in 14 years.
Gross domestic product grew at a 0.1 percent annualized rate from January through March, compared with a 2.6 percent gain in the prior quarter, figures from the Commerce Department showed Wednesday in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a 1.2 percent increase.
The pullback in growth came as snow blanketed much of the eastern half of the country, keeping shoppers from stores, preventing builders from breaking ground and raising costs for companies including United Parcel Service.
Companies in the U.S. boosted payrolls by 220,000 in April, figures from the ADP Research Institute in Roseland, New Jersey, showed Wednesday. The median forecast of 45 economists surveyed by Bloomberg called for an advance of 210,000.
The ADP numbers come before data from the Labor Department on May 2.
The government's report may show employers added 215,000 workers in April, the most since November, according to economists' projections.