Investing.com - U.S. stocks rose on Wednesday after the Federal Reserve cut its monthly bond-buying stimulus program by $10 billion to $35 billion due to a rebounding economy.
At the close of U.S. trading, the Dow 30 rose 0.58%, the S&P 500 index rose 0.77%, while the NASDAQ Composite index rose 0.59%.
The Volatility S&P 500 index, which measures the outlook for market volatility, was down 12.02% at 10.61.
The Federal Reserve on Wednesday said it was leaving its benchmark interest rate unchanged at 0.00-0.25% but said it would cut its monthly bond-buying program to $35 billion from $45 billion due to improvements taking place in the economy, which drew applause on Wall Street.
"Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months. Labor market indicators generally showed further improvement. The unemployment rate, though lower, remains elevated," the Fed said in its statement.
"Household spending appears to be rising moderately and business fixed investment resumed its advance, while the recovery in the housing sector remained slow."
Stocks also rose after the Fed said it would keep benchmark interest low for quite some time after stimulus programs end, which boosted stocks with hopes that borrowing costs will stay low for the foreseeable future.
"It likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the Fed said.
"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."
In other news, FedEx Corporation (NYSE:FDX) and Adobe Systems Incorporated (NASDAQ:ADBE) released earnings that beat estimates, while Morgan Stanley (NYSE:MS) advised purchasing Cisco Systems Inc (NASDAQ:CSCO) shares.
Amazon.com Inc (NASDAQ:AMZN) shares gained in Wednesday trading after the online retailer introduced its first smartphone.
Leading Dow Jones Industrial Average performers included Coca-Cola Company (NYSE:KO), up 1.58%, Nike Inc (NYSE:NKE), up 1.50%, and UnitedHealth Group Incorporated (NYSE:UNH), up 1.34%.
The Dow Jones Industrial Average's worst performers included Intel Corporation (NASDAQ:INTC), down 0.08%, Microsoft Corporation (NASDAQ:MSFT), down 0.08% as well, and Boeing Company (NYSE:BA), which was up 0.02%.
European indices, meanwhile, ended the day largely higher.
After the close of European trade, the DJ Euro Stoxx 50 rose 0.12%, France's CAC 40 fell 0.13%, while Germany's DAX 30 rose 0.10%. Meanwhile, in the U.K. the FTSE 100 rose 0.17%.
On Thursday, the U.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.