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MONEY
S&P 500

Dow closes at record high as Fed says rates to stay low

David Carrig
USA TODAY

The Dow jumped to a record close Wednesday after the Federal Reserve reaffirmed that a key short-term interest rate will stay near zero for a "considerable time" after its bond-buying program ends next month.

Traders work on the floor of the New York Stock Exchange.

Investors have been eagerly awaiting the Fed statement for clues on the timing and pace of interest rate hikes and were relieved the central bank maintained its current language on rates.

The Fed has maintained a near zero interest rate policy since the 2008 financial crisis, which has boosted stocks to record levels during a five-and-half-year bull market.

"The Fed is not going to take the punch bowl away," said Brad McMillan, Chief Investment Officer for Commonwealth Financial. "They didn't want to spook the market."

The Dow Jones industrial average rose 24.88 points, or 0.2%, to a record close of 17,156.85, and set an all-time intraday high of 17,221.11. It was the sixteenth record close for the blue chip index in 2014.

The Standard & Poor's 500 index jumped back above the 2000 mark as it gained 2.59 points, or 0.1%, to 2001.57. The S&P 500 is about 6 points below its record close of 2007.71

The Nasdaq composite index rose 9.43 points, or 0.2%, to 4562.19.

The latest economic report gave the Fed more evidence that inflation remains a low threat as consumer prices fell last month. The consumer price index fell 0.2% in August, the Labor Department said Wednesday. It was the first drop in 16 months.

The yield on the 10-year Treasury note rose to 2.62% from 2.59% Tuesday.

Overseas, Asian markets were mixed, with Japan's Nikkei 225 losing 22.86 points, or 0.1%, to close at 15,888.67 while Hong Kong's Hang Seng index climbed 240.4 points, or 1%, to 24,376.41 and the Shanghai Composite gained 11.34 points, or 0.5%, to 2307.89.

European markets were mostly higher as Germany's DAX rose 0.3% to 9661.50 and France's CAC 40 gained 0.5% to 4431.41. Britain's FTSE 100 was down 0.2% to 6780.90 ahead of Thursday's vote on Scotland's independence from the U.K..

Tuesday, stocks rose as the Dow rose 100.83, or 0.6%, to 17,131.97, just short of its July 16 record close of 17,138.20. The S&P 500 gained 14.85, or 0.8%, to 998.98. The Nasdaq rose 33.86, or 0.8%, to 4552.76.

Contributing: The Associated Press

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