Nasdaq hits record high after US Fed Reserve leaves rates unchanged

NEW YORK (REUTERS) - The Nasdaq hit a record intraday high on Thursday (Sept 22)  amid broad gains in US stocks, a day after the Federal Reserve stood pat on interest rates.

While the risks to economic outlook were roughly "balanced", the Fed maintained rates as inflation continued to run below its 2 per cent target and members saw room for improvement in the labour market.

The central bank slowed the pace of future hikes and cut its longer run interest rate forecast to 2.9 per cent from 3 per cent, but sent a strong signal for a move by the end of this year.

"The Fed probably appeared less hawkish than what the markets had expected," said Ryan Larson, head of equity trading at RBC Global Asset Management in Chicago. "I think the market continues to be focused on the Fed pushing a hike for later as a good thing rather than bad."

The consensus among economists is for a hike in December as the Fed's November meeting comes right around the US Presidential elections.

The probability of a November hike stands at a modest 12.4 per cent, and rises to 58.4 per cent for December, according to the CME Group's FedWatch tool.

The dollar index dropped 0.6 per cent on Thursday, and was on track to mark the second straight day of losses after the central bank's decision.

Oil prices rose about 1.8 per cent as the dollar fell and US crude inventories recorded a surprise drop.

At 9:36 a.m. ET (9:36 p.m Singapore time), the Dow Jones Industrial Average was up 132.52 points, or 0.72 per cent, at 18,426.22. The S&P 500 was up 15.01 points, or 0.69 per cent, at 2,178.13. The Nasdaq Composite was up 32.98 points, or 0.62 per cent, at 5,328.22, after rising as much as 0.65 per cent to a record of 5329.92.

The S&P energy index surged 1.33 per cent and was the top gainer among the 11 major sectors of the benchmark index.

Adding some support to the Fed's plans for at least one hike this year was a report that showed the number of Americans applying for unemployment last week fell to a two-month low.

The S&P 500 index showed 26 new 52-week highs and no new lows, while the Nasdaq recorded 80 new highs and three new lows.