NEW YORK (AFP) - The Dow surged into positive territory for the first time this year on Thursday as US stocks rallied a day after the Federal Reserve struck a dovish tone in keeping interest rates low.
The Dow Jones Industrial Average jumped 155.73 points (0.9 per cent) to 17,481.49, eclipsing its ending price of 2015 by about 0.3 per cent.
The broad-based S&P 500 rose 13.37 (0.66 per cent) to 2,040.59, while the tech-rich Nasdaq Composite Index gained 11.01 (0.23 per cent) at 4,774.99.
“We’re back to game-on,” said Mace Blicksilver, director of Marblehead Asset Management. “The Fed took themselves off the table.”
The Fed on Wednesday trimmed its US growth forecast and Fed chairman Janet Yellen signaled a more gradual path of interest rate increases due to global growth worries.
The Fed’s outlook still could lead to two rate increases in 2016, but many analysts are skeptical the US central bank will be that aggressive.
“It feeds these suspicions that the Fed is canceling the rate cycle slowly but surely,” said JPMorgan Chase analyst John Normand.
US stocks tumbled in the first six weeks of the year, with the Dow falling below 15,700 in early February.
But markets have rallied over the last month or so, in part due to strengthening oil prices and expectations the Fed would adopt a dovish posture, analysts said.
On Thursday, US oil prices closed above US$40 a barrel for the first time in 2016 and the dollar tumbled, as markets continued to digest the Fed decision.
“The fear of tightening has been hanging over all markets,” said Chris Low, chief economist at FTN Financial.
“It’s fitting the market rose into positive territory the day after the Fed meeting.”
Most Dow components registered strong gains, including Caterpillar, which rose 2.1 per cent despite projecting weaker-than-expected first-quarter earnings.
Other gainers included industrial giants Boeing and General Electric, up 2.5 per cent and 2.6 per cent, respectively, and oil companies ExxonMobil and Chevron, which climbed a respective 1.5 per cent and 1.6 per cent.
FedEx vaulted 11.8 per cent as it reported fiscal third-quarter sales of US$12.7 billion, up 8.5 per cent from the year-ago period. The package-delivery giant also lifted its 2016 profit forecast range.
Amazon fell 2.6 per cent on reports that Apple is moving some of its cloud computing data from Amazon to a rival service offered by Google parent Alphabet. Alphabet advanced 0.2 per cent.