U.S. stocks rally after Fed rate hike

U.S. stocks traded higher in the morning session on Thursday, as investors mainly digested the U.S. Federal Reserve's decision to raise interest rates.

At midday, the Dow Jones Industrial Average was up 126.68 points, or 0.64 percent, to 19,919.21. The S&P 500 gained 13.55 points, or 0.60 percent, to 13.55. The Nasdaq Composite Index rose 33.64 points, or 0.62 percent, to 5,470.31.

In view of realized and expected labor market conditions and inflation, the Federal Open Market Committee decided to raise the target range for the federal funds rate to 0.50 percent to 0.75 percent, said the Fed in a statement after concluding a two-day policy meeting.

"The moderate economic expansion continued strengthening of labor market and the improvement in inflation condition supported the central bank to raise interest rates after nearly a one-year pause," said the statement.

The Fed also released its updated economic projections, which indicated that the central bank forecasts three rate hikes next year, while in its September projections, Fed officials expected only two rate hikes in 2017.

On the economic front, the Consumer Price Index for all urban consumers increased 0.2 percent in November on a seasonally adjusted basis, on par with market consensus, the U.S. Labor Department said Thursday.

In the week ending Dec. 10, the advance figure for seasonally adjusted initial claims was 254,000, a decrease of 4,000 from the previous week's unrevised level of 258,000, said the Labor Department in another report.

U.S. stocks ticked down Wednesday, as the Fed decided to raise the interest rate by 25 basis points, the first time in 2016. Enditem