NEW YORK -- After all the attention paid to the Federal Reserve on Wednesday, benchmark U.S. stocks indexes ended the session at almost the exact place they were before the central bank pledged to keep interest rates low for a "considerable time."
Commodity, financial and telephone shares led gains in seven of the 10 main industry groups in the Standard & Poor's 500 index. FedEx and Lennar rallied more than 3 percent after posting earnings that topped analysts' estimates. Auxilium Pharmaceuticals jumped 45 percent, the most ever, after getting a takeover bid.
The S&P 500 increased 0.1 percent 2,001.57 after rising as much as 0.6 percent following the release of the Fed's statement at 2 p.m. The Dow Jones industrial average increased 24.88 points to a record 17,156.85 after jumping as much as 89 points. Both finished within a point of their levels at 2 p.m., when the Fed released its statement. Fed Chair Janet Yellen later told a press conference that the pledge for low rates is conditional on the economy.
"Yellen may be a hawk in dove's clothing because she keeps reiterating that economic data can change the pace of rate hikes and the path to normalization," Karyn Cavanaugh, the New York-based senior market strategist at Voya Investment Management, said by phone. "The economy is gaining steam. I think we could see some increase in rates by March or sooner."
Stocks briefly extended gains as the Fed's statement said the economy is expanding at a moderate pace and inflation is below its goal. It maintained a commitment to keep interest rates near zero for a "considerable time" after asset purchases are completed in October. Fed officials raised their median estimate for the federal funds rate at the end of 2015 to 1.375 percent, compared with 1.125 percent in June. The rate will be 3.75 percent at the end of 2017, the Fed said in its Summary of Economic Projections.
"The labor market has yet to fully recover," Yellen said at a press conference after a meeting of the Federal Open Market Committee on Wednesday in Washington. "There are still too many people who want jobs but can't find them." She added that "inflation has been running below the committee's 2 percent objective." In July, the Fed said inflation was "somewhat closer" to its goal.
monthly bond buying to $15 billion in their seventh consecutive $10 billion cut, staying on course to end the program in October. Bond purchases intended to hold down long-term interest rates have swelled the Fed's balance sheet to $4.42 trillion.
The Chicago Board Options Exchange volatility index, the benchmark gauge of options prices known as the VIX, lost 0.6 percent to 12.65 after earlier gaining as much as 14 percent. More than 6.1 billion U.S. shares traded hands, 8.8 percent above the three-month daily average.
The S&P 500 rallied 0.8 percent on Tuesday, led by energy stocks, after China's central bank reportedly started providing about $81 billion in loans to its biggest banks.
Data released Wednesday showed the cost of living in the United States unexpectedly dropped in August for the first time in more than a year, showing inflation still is falling short of the Fed's goal. The central bank is scrutinizing data on labor and prices to gauge whether the economic recovery is strong enough to withstand higher borrowing rates.
The S&P 500 will advance to 2,050 by the end of the year, according to Credit Suisse Group AG equity research analysts who raised their estimate from an earlier projection of 2,020. Equities are "abnormally cheap" compared with other asset classes, the Credit Suisse team said. Stocks will continue to climb through mid-2015, according to the report, before a second-half correction in 2015 as the Fed raises interest rates.
FedEx added 3.3 percent to $159.71. The company's first- quarter earnings increased 24 percent, helped by the completion of a record buyback program, growth in domestic air shipments and lower pension expense.
Lennar climbed 5.8 percent to $41.40. The second-biggest U.S. homebuilder by market value reported fiscal third-quarter net income of 78 cents a share, exceeding the 67-cent average of analysts in a Bloomberg survey.
U.S. Steel rose 10 percent to a three-year high of $45.61. The steelmaker that has reported five years of losses said the Ontario Superior Court granted protection for its Canada unit. The company also said it canceled $800 million of capital investments in projects in Minnesota and Indiana.
Auxilium Pharmaceuticals jumped 45 percent to $31.18. Endo International, a maker of pain drugs, said it bid $28.10 a share in cash and stock, a 31 percent premium to Tuesday's closing price, for the maker of men's health medicines. Endo said its offer didn't include a deal for QLT, which Auxilium agreed to take control of in June. That purchase hasn't yet closed. Auxilium on Wednesday said it has adopted a one-year holder rights plan and confirmed its QLT offer.
Adobe Systems lost 4.9 percent to $67.30 after reporting third-quarter sales of $1.01 billion. Analysts on average estimated revenue of $1.02 billion. The software maker posted profit before some items of 28 cents a share, exceeding analysts' projections for 26 cents.
Rackspace Hosting tumbled 18 percent to $32.39 after saying it rejected bid offers. The cloud-computing company decided to remain independent after ending a review on strategic options, and rebuffed investor calls to buy back shares, saying it will preserve cash for future acquisitions.
Gogo advanced 2.9 percent to $18.47 after announcing a partnership with Virgin Atlantic to offer in-flight connectivity services on Virgin's aircraft.
General Mills lost 4.4 percent to $50.83 after reporting earnings and sales that missed analysts' estimates. Revenue at the cereal maker was $4.27 billion, compared with the average analyst estimate of $4.38 billion.