NEW YORK | A more upbeat Federal Reserve is reassuring investors that they’ve been making the right bets.
Stocks bounded higher Wednesday after the central bank said the economy appears to be “leveling out” rather than simply shrinking at a slower rate. The Fed’s more positive take on the economy compared to its assessment in June wasn’t surprising, but it still bolstered hopes that the economy is in fact rebounding.
Wednesday’s advance restarted the market’s summer rally after a pause Monday and Tuesday. Major market indexes jumped more than 1 percent, including the Dow Jones Industrial Average, which jumped 120 points.
Financial and technology shares posted some of the strongest gains after ratings upgrades and profit reports provided fresh evidence of a recovery. The stock market’s advance was itself adding to bank and insurance stock gains - its climb means their investment portfolios are surging in value.
Investors drew reassurance from Fed policymakers’ comments. The central bank left interest rates unchanged, as expected, following a two-day policy meeting.
The Dow rose 120.16, or 1.3 percent, to 9,361.61. The Standard & Poor’s 500 Index rose 11.46, or 1.2 percent, to 1,005.81, while the Nasdaq Composite Index gained 28.99, or 1.5 percent, to 1,998.72.
The gains came a day after the market posted its biggest loss in five weeks. The Dow fell 97 points as investors worried about the health of banks.
Investors found encouragement, however, from a range of industries.
Meanwhile, bond prices were mixed after an auction of $23 billion in 10-year Treasury notes saw demand in line with recent levels but down from last month. The Treasury Department is issuing a record $75 billion in three auctions this week. The third auction, for $15 billion in 30-year bonds, is Thursday.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71 percent from 3.67 percent late Tuesday. Bond prices jumped Tuesday as stocks fell.
The Russell 2000 Index of smaller companies rose 10.05, or 1.8 percent, to 572.17.
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