Dow, S&P 500 at record highs as Fed-driven rally continues

Federal Reserve has said it will keep interest rates near zero for a 'considerable time'

US stocks rose on Thursday, a day after the US Federal Reserve kept intact its pledge to keep interest rates low, providing a backstop for investors that helped lift both the Dow and S&P to record highs.

The Fed said Wednesday at the conclusion of a two-day policy meeting it would keep interest rates near zero for a "considerable time," language supportive of equities which some had expected to be dropped from the statement.

The central bank's outlook on Wednesday included forecasts for higher-than-expected rates in 2015 and 2016, which helped financial stocks rise 1.1%, leading the day's gains on Wall Street. Goldman Sachs rose 1.7% to $187.89, the biggest boost to the Dow.

US equity markets have rallied for three consecutive sessions as the Fed's stance eased investor worries the central bank was ready to pivot away from its years-long policy of holding rates at rock bottom levels, which stimulated demand for risk assets like stocks.

That support has lifted the benchmark S&P 500 to 34 records in 2014, and has helped markets sidestep a 10-percent "correction" for almost three years, even while individual market sectors have seen multiple pullbacks.

The climb to repeated record highs has coincided with steadily improving economic data, while the Fed's support has allowed investors to shrug off occasional weak numbers, like the August payrolls report. At the same time, low Treasury interest rates have pushed yield-hungry investors into equities.

US housing starts and permits fell in August, but upward revisions to the prior month's data indicated gradual improvement in the housing market. A sharp drop in the number of Americans filing new claims for unemployment benefits last week suggested the slowdown in job growth last month was probably an anomaly.

"Things are starting to get a little better for the banks in general and that really does help the financials," said Patty Edwards, managing director for investments at US Bank Wealth Management in Seattle.

"You are seeing low growth starting to improve some, you are starting to see all the things that would turn in an economy."

The Dow Jones industrial average closed up 109.14 points, or 0.64%, to 17,265.99, the S&P 500 added 9.79 points, or 0.49%, to 2,011.36, and the Nasdaq Composite gained 31.24 points, or 0.68%, to 4,593.43.

After the closing bell, Oracle Corp shares fell 2.2% to $40.64. The business software maker reported quarterly results and said long-time chief executive Larry Ellison will become executive chairman and chief technology officer, with executives Safra Catz and Mark Hurd taking over the CEO role.

Advancing issues outnumbered decliners on the NYSE by 1,845 to 1,200, for a 1.54-to-1 ratio on the upside; on the Nasdaq, 1,622 issues rose and 1,083 fell for a 1.50-to-1 ratio favoring advancers.

The S&P 500 posted 56 new 52-week highs and 8 new lows; the Nasdaq Composite had 85 new highs and 64 new lows.

Volume was active, with about 5.88 billion shares traded on US exchanges, slightly above the 5.69 billion average so far this month, according to BATS Global Markets.