U.S. stocks follow Apple, Boeing higher Federal Reserve

U.S. stocks follow Apple, Boeing higher
Federal Reserve holds rates unchanged; Bernanke speaks
NEW YORK (MarketWatch) — U.S. stocks extended gains into a second day Wednesday as investors applauded Apple Inc.’s earnings and offered muted reaction to the Federal Reserve’s decision to leave its monetary policy unchanged.

Major indexes retained much of the day’s advance as Fed Chairman Ben Bernanke told reporters that the central bank was comfortable keeping monetary policy “highly accommodative” given economic growth was likely to remain moderate. Read more on Bernanke's comments.

“The market is expecting nothing, but it doesn’t want to see QE3 [a third round of quantitative easing] taken completely off the table,” said Brad Sorensen, Charles Schwab’s director of market and sector analysis.

The central bank stood pat on interest rates as expected and said economic growth would pick up gradually. Read full story on Fed’s rate decision.

“As expected, they really did manage to straddle the fence in their commentary, so we’re [the Fed] going to keep doing what we’re doing. It’s like the end of a ‘Batman’ show — tune in next time,” said Derrick Irwin, portfolio manager for Wells Fargo Advantage Funds.

The Dow Jones Industrial Average DJIA +0.69% ended up 89.16 points, or 0.7%, to 13,090.72, with gains for 24 of 30 components.

Dow component Boeing Co. BA +5.29% surged 5.3%, its best day since August, after the airplane manufacturer reported increased quarterly profit and raised its earnings outlook for 2012. Read more on Boeing.

Weighing on the Dow, Caterpillar Inc. CAT -4.58% shares slid 4.6% after the heavy-equipment maker reported quarterly sales short of estimates. That was Caterpillar’s worst day in seven months. Read more on Caterpillar.

The S&P 500 Index SPX +1.36% added 18.72 points, or 1.4%, to 1,390.69. The tech sector led gains, surging 3.2%; all 10 industry sectors were higher.

The Nasdaq Composite Index COMP +2.30% surged 68.03 points, or 2.3%, to 3,029.63, its first close above 3,000 since Friday.

For every stock slipping, roughly three gained on the New York Stock Exchange, where 823 million shares traded hands. NYSE composite volume was just under 4 billion, above its past month average.

Shares of Apple AAPL +0.16% jumped 8.9%, breaking a five-day losing streak as a number of brokerages raised their price targets a day after the iPhone and iPad maker reported a quarterly profit that blew out expectations. Read more on investor response to Apple.

“Apple’s huge positive revenue and earnings surprise should have a ‘halo’ effect over the stock market for at least one trading session,” wrote Fred Dickson, chief investment strategist at Davidson Cos., in a note. “If nothing else, Apple’s astonishing fundamental performance over the last two years strongly suggests consumers will buy outstanding products even at very high prices.”
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