MARKET SNAPSHOT: U.S. Stocks Rise After Fed Keeps Low-rates Stance

By Kate Gibson

U.S. stocks rose on Tuesday, with the S&P 500 Index hitting a fresh 17-month high, after the Federal Reserve said it would keep its key interest rate low for an extended time, fueling a rally in financial shares.

"No surprise was the hallmark of the statement, including the dissent," said Jim Dunigan, managing executive of investments at PNC Wealth Management.

A day after finishing at a 17-month high, the S&P 500 Index (SPX) added 8.07 points, or 0.7%, to 1,158.58, with natural-resource companies and financials leading the gains that extended to all 10 of the index's industry groups.

The Nasdaq Composite Index (RIXF) climbed 12.18 points, or 0.5%, to 2,374.38.

Zions Bancorp (ZION) and Citigroup Inc. (C) fronted gains among banks after the central bank reiterated low rates remain necessary, despite a recovering economy.

While the Fed was widely expected to keep its target rate for overnight loans at between zero and 0.25%, analysts combed the central bank's accompanying policy statement for clues as to the timing of future rate-hike moves.

Any differences in the Fed's wording that signaled the central bank would hike rates sooner rather than later could have sparked selling of equities, given that higher rates translate to increased borrowing costs and typically hinder economic growth.

"They seemed to indicate a significant rise in business spending, so there was a slightly more positive tone on economic conditions," said Dunigan.

The sole objector, Thomas Hoenig, president of the Kansas City Federal Reserve Bank, dissented to the 'extended period' phrasing for a second consecutive meeting. .

"Hoenig was the only dissenter at the meeting; however, we believe that with the information in hand as of right now, the Fed is likely to alter its language somewhat at the upcoming Fed meeting. This position is, of course, open to change," said Dan Greenhaus, chief economic strategist at Miller Tabak.

With 30 minutes of trade remaining, the major indexes were all at or near session highs. The Dow Jones Industrial Average (DJI) rose 30.83 points, or 0.3%, at 10,672.98, with 21 of its 30 components advancing, led by General Electric Co. (GE). Its shares gained 4.5% after the company's CFO said he expects the conglomerate's earnings and dividend to climb next year.

Also boosting the Dow, Intel Corp. (INTC) rose 4% after the technology bellwether released its newest server chips.

On the New York Stock Exchange, advancers led decliners more than 2-to-1.

The dollar weakened against the euro after S&P opted not to downgrade Greece, a step the rating agency last month warned was under consideration.

Ahead of Tuesday's open, the Commerce Department reported new-home construction fell 5.9% to a seasonally adjusted annual rate of 575,000. The January count was revised up to a pace of 622,000 units.

In a separate report, the Labor Department said the price of imports declined 0.3% in February, the first drop in seven months.

A standout among retailers was Limited Brands Inc. (LTD), shares of which rose 3.9%. The company declared a special dividend of $1 a share and said it would repurchase up to $200 million in stock.

The dollar's slide against the euro and other major currencies boosted commodities including gold and oil, making them less costly to foreign buyers. and

Shares of natural-resource companies also rose, with Cliffs Natural Resources Inc. (CLF) up 4.2% and Newmont Mining Corp. (NEM) gaining 3.2%.