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NEW YORK_Stocks are holding on to most of their gains after the Federal Reserve left its benchmark interest rate unchanged and said the pace of economic activity has improved.
The Fed was expected to keep interest rates at a record low of essentially zero. The central bank's statement accompanying its rate decision Wednesday has confirmed that the economy is slowly recovering.
Policymakers said they would keep interest rates low for an "extended period" and said inflation is likely to remain tame.
After the Fed's announcement, the Dow is up 94 at 9,865. It had been up 115 ahead of the announcement. Stocks tend to fluctuate after central bank meetings.
The Standard & Poor's 500 index is up 8 at 1,055, while the Nasdaq composite index is up 13 at 2,070.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
NEW YORK (AP) _ Investors rushed into stocks after stronger reports on service industries and employment eased two of the biggest worries about the economy.
The Dow Jones industrial average rose more than 100 points after the Institute for Supply Management said service industry activity grew for a second straight month in October. The trade group's service index slipped to 50.6 from 50.9 in September. A reading above 50 signals growth. Analysts polled by Thomson Reuters had expected a 51.5.
Although the index didn't meet forecasts, the ISM said new orders, which are an indicator of future business activity, grew faster. Business activity also picked up.
Encouraging news about the labor market also boosted investors' mood. The ADP National Employment Report said 203,000 private sector jobs were lost in October, down from the 227,000 lost in September. It was the seventh straight month of declining job losses.
That stirred hopes for a better-than-expected employment report from the Labor Department on Friday.
The latest reports bolstered hopes that consumers could increase consumer spending, a critical factor for an economic recovery.
The advance also came as investors awaited an assessment of the economy from the Federal Reserve following the conclusion of a two-day meeting later Wednesday.
Policy makers aren't expected to raise the Fed's benchmark interest rate from essentially zero, hoping to sustain an economic turnaround by keeping borrowing rates low. But investors will be looking for the Fed's take on the 3.5 percent annual growth rate in the economy during the third quarter and whether such growth will continue. Investors also would like more guidance on how the Fed plans to withdraw its stimulus programs without threatening the recovery.
Investors have grown fearful that the economic rebound they've been betting on over the past eight months will be fleeting, considering that job losses remain high and consumers still aren't spending freely. Stocks have zigzagged over the past few weeks amid the heightened uncertainty.
Christopher Molumphy, chief investment officer for fixed income at Franklin Templeton Investments, said the reports are encouraging though he warned improvements in the economy are likely to be gradual.
"The individual items together are continuing to point to a generally improving fundamental backdrop," he said.
In midafternoon trading, the Dow rose 107.16, or 1.1 percent, to 9,879.07. The broader Standard & Poor's 500 index rose 9.38, or 0.9 percent, to 1,054.79, and the Nasdaq composite index rose 12.20, or 0.6 percent, to 2,069.52.
Two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 650.6 million shares, compared with 739.1 million at the same point Tuesday.
Stocks ended mostly higher Tuesday, after swinging between gains and losses, as an increase in commodity prices and corporate dealmaking abated some of investors concerns about the economy. The Dow slipped 17 points, after rising 77 on Monday, while broader indexes rose modestly.
Subodh Kumar, an independent investment strategist in Toronto, said he expects volatility will remain elevated as investors look for clues about the pace of recovery in the economy.
"Right now the issue for the market is, is the news getting much better or is it just getting incrementally better," he said.
Gains in several big stocks pulled the Dow industrials higher.
Walt Disney rose after China's planning agency signed off on plans for a Disney theme park in Shanghai. The stock advanced 69 cents, or 2.5 percent, to $28.31.
Microsoft Corp. rose 62 cents, or 2.3 percent, to $28.18 after saying it would cut 800 jobs in addition to the 5,000 layoffs it announced in January.
Cisco Systems Inc. rose 23 cents, or 1 percent, to $23.18 ahead of the computing networking company's fiscal first-quarter earnings report, which is due after the closing bell.
Among companies posting earnings, media conglomerate Time Warner Inc. reported a 38 percent drop in third-quarter profit, but the results beat expectations. The company also boosted its full-year earnings forecast. Its shares rose 15 cents to $30.31.
Pulte Homes Inc.'s third-quarter loss widened, but the homebuilder said it has continued to see stabilization in the housing market. Shares rose 41 cents, or 4.4 percent, to $9.64.
WellCare Health Plans Inc., which provides Medicare and Medicaid managed care, posted a profit for the third quarter due to drops in medical and other expenses. The stock rose $2.22, or 8.4 percent, to $28.54.
In other trading, bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.51 percent from 3.47 percent late Tuesday.
The dollar fell against other major currencies, helping to send commodities prices higher. Gold surged to nearly $1,100 an ounce. Crude oil added 69 cents to $80.29 a barrel on the New York Mercantile Exchange as the government said U.S. crude supplies fell more than expected.
The Russell 2000 index of smaller companies fell 1.36, or 0.2 percent, to 569.26.
In afternoon trading, Britain's FTSE 100 rose 1 percent, Germany's DAX index gained 1.7 percent, and France's CAC-40 jumped 2.4 percent. Japan's Nikkei stock average rose 0.4 percent.
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