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1st LD Writethru: U.S. stocks rally after Fed rate decision

Xinhua, March 17, 2016 Adjust font size:

U.S. stocks ended higher Wednesday after the U.S. Federal Reserve kept its benchmark short-term interest rates unchanged as widely expected.

The Dow Jones Industrial Average rose 74.23 points, or 0.43 percent, to 17,325.76. The S&P 500 added 11.29 points, or 0.56 percent, to 2,027.22. The Nasdaq Composite Index increased 35.30 points, or 0.75 percent, to 4,763.97.

After the conclusion of its two-day policy meeting, the U.S. central bank on Wednesday decided to keep its benchmark interest rates unchanged, noting that "global economic and financial developments continue to pose risks" to the U.S. economy.

In a statement released Wednesday afternoon, the Fed said U.S. "economic activity has been expanding at a moderate pace despite global economic and financial developments in recent months," but these developments continue to pose risks.

The Fed also cut its GDP growth outlook for 2016 from 2.4 percent to 2.2 percent and reduced 2017's call from 2.2 percent to 2.1 percent, according to the latest Summary of Economic Projections.

"The Fed shifted from a dot plot suggesting 4 rate hikes this year to one suggesting 2. It will take a while for markets to settle on what the new dots mean. On one hand, a less aggressive Fed means higher inflation. On the other hand, the Fed is telling us they are no longer as concerned about inflation as in December," said Chris Low, chief economist at FTN Financial.

On the economic front, the Consumer Price Index (CPI) for all urban consumers declined 0.2 percent in February on a seasonally adjusted basis, on par with market estimates, the U.S. Labor Department said Wednesday.

The index for all items less food and energy, often referred to as the core CPI, rose 0.3 percent in February, the same rate as the prior month.

U.S. privately-owned housing starts in February were at a seasonally adjusted annual rate of 1.178 million units, 5.2 percent above the revised January estimate, the Commerce Department reported Wednesday.

Meanwhile, U.S. industrial production decreased 0.5 percent in February after increasing 0.8 percent in January, the Fed said Wednesday. Endit