Stocks rose today after Federal Reserve policy makers left U.S. borrowing costs untouched, as expected, signaling there is no need to slow inflation.
"Leaving them unchanged just means the Fed has a friendly posture to the financial markets, and that's long-term bullish for stocks," said Bruce Bittles, a market strategist at J.C. Bradford & Co. in Nashville.
Banks such as J.P. Morgan & Co. led stocks higher. They make more money when inflation and interest rates aren't rising.
Higher interest rates would have made it more expensive for companies to borrow money, cutting into their earnings.
At 3 p.m., the Dow Jones Industrial Average was up 82.21 to 8,864.33, led by J.P. Morgan, up 1 1 3/1 6 to 134 1/4 . The indicator was within a stone's throw of its record 8,906.43 of March 20.
The Standard & Poor's 500 index rose 13.65 to 1107.20, while the technology-laden Nasdaq composite index rose 18.46 to 1837.16.
Technology stocks were among the day's leaders. Dell Computer rose 1 1/4 at 68 7/1 6, Microsoft rose 1 3/8 to 89 3/8 and Intuit rose 1 1/4 at 48 3/4 .
Motorola Inc. rose 2 1 1/1 6 to 60 1/8 after the Wall Street Journal reported that the company plans a major restructuring.
The ascent reverses four days of losses for the blue-chip index, which slipped more than 122 points since Wednesday. The market fell 13.96 Monday to close at 8,782.12.
Economic trouble in Asia has slowed inflation in the U.S., even as the U.S. economy boomed. In recent months, sales of new and existing homes surged to record levels, personal income and spending posted gains and job creation exceeded expectations.
The policy-setting Federal Open Market Committee released a statement on the policy decision about 2:15 p.m.
None of the 37 banks and securities firms that deal directly with the Fed expected the FOMC to either increase or cut interest rates at today's meeting, according to economists.
Today, economic reports boosted optimism that inflation isn't about to pick up. The Purchasing Management Association's prices paid index fell to 48.7 in March from 55.5, indicating fewer companies reported price increases.
The Conference Board's consumer confidence index fell to 134.3 in March from 137.1 a month earlier, suggesting the economy is starting to slow.