U.S. stocks rallied as the Federal Reserve ended seven years of near-zero interest rates, and assured investors that the world’s largest economy is resilient enough to withstand future increases in borrowing costs at a gradual pace.
Equities extended gains following the central bank’s move, pushing the Standard & Poor’s 500 Index’s biggest three-day rally since Oct. 5 as the benchmark rebounded from its worst weekly drop since August. Gains were widespread with nine of the gauge’s 10 main industries rising more than 1 percent as Fed Chair Janet Yellen expressed confidence in the economic outlook.
The S&P 500 jumped 1.5 percent to 2,072.98 at 4 p.m. in New York, rising for three consecutive days for the first time since October while erasing losses for the year. The benchmark surged above its average prices during the past 50 and 200 days.
While policy makers have decided the economy is ready for higher borrowing costs, they continue to stress that progress in economic data will dictate the ultimate course. A report today showed new-home construction rebounded in November, led by gains in single-family dwellings. Work began on the most stand-alone houses since January 2008, and permits for similar projects reached an eight-year high.
A separate gauge showed manufacturing stagnated last month, held back by less production of durable goods such as automobiles and metals that reflects weak global demand.