Wall Street racked up gains on Wednesday after the U.S. Federal Reserve kept interest rates unchanged, for now leaving intact the low-rate environment that has helped underpin the bull market.
The Nasdaq closed at a record high.
The central bank strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further.
Earlier on Wednesday, global markets reacted to the Bank of Japan's abrupt shift to targeting interest rates on government bonds to achieve its elusive inflation target.
Traders generally had not expected the Fed to raise rates, with bets before the meeting of only an 18 percent chance of a hike, according to the CME FedWatch website.
"There was just a little bit of doubt in everybody’s mind that maybe they would go ahead and raise rates now and that got cleared up ... people felt free to put some money into equities," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
"Couple that with the BOJ lower-for-longer news story from earlier today and the equity market is doing well," Tuz said.
The Dow Jones industrial average rose 163.74 points, or 0.9 percent, to 18,293.7, the S&P 500 gained 23.36 points, or 1.09 percent, to 2,163.12 and the Nasdaq Composite added 53.83 points, or 1.03 percent, to 5,295.18.
All 11 major S&P sectors finished in positive territory. Energy shares were the best performing sector, up 2.1 percent, as oil prices rose.
Concerns over whether the Fed would raise rates prompted a return of volatility to the stock market in recent weeks after two months of calm. For the year, the benchmark S&P 500 is up 5.8 percent.
The Fed has held its target rate for overnight lending between banks in a range of 0.25 percent to 0.50 percent since December, when it raised borrowing costs for the first time in nearly a decade.
"We are in a pretty good environment for stocks with low interest rates and companies beginning to show signs of life although the earnings aren’t as robust as we’d like to see," said Alan Rechtschaffen, portfolio manager at UBS in New York. "When you are comparing things to the low interest rates we have, things can look attractive that wouldn’t look attractive in a normal interest rate environment."
Fed Chair Janet Yellen, speaking after the central bank's latest policy statement, said U.S. growth was looking stronger and rate increases would be needed to keep the economy from overheating and fuelling high inflation.
After the Fed's statement, traders were betting on a 63-percent chance of a December rate increase, up from 58 percent just before the statement, according to the FedWatch website.
"The body language makes it sound like they're warming people up for December," said Stephen Massocca, chief investment officer at Wedbush Equity Management in San Francisco.
FedEx shares gained 6.9 percent after the package delivery company's profit report.
About 7.6 billion shares changed hands on U.S. exchanges, above the 6.8 billion daily average for the past 20 trading days, according to Thomson Reuters data.
NYSE advancing issues outnumbered decliners by a 6.26-to-1 ratio; on Nasdaq, a 2.65-to-1 ratio favored advancers.
The S&P 500 posted 16 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 86 new highs and 28 new lows.