Stocks edged higher Wednesday after the Federal Reserve reassured investors it was in no rush to raise interest rates from historically low levels.
The central bank said that the economy is strengthening, but not enough for policymakers to signal an imminent rate hike. The Fed's benchmark rate has remained near zero for more than six years in an effort to bolster the economy and encourage borrowing, lending and investment.
Surging stocks and historically low interest rates have gone hand-in-hand over the last six years, pushing the market to all-time highs.
As the economy has recovered investors have been trying to gauge when the Fed will begin raising rates and how aggressively it will raise them. Investors worry that, should the Fed raise rates too quickly, it could stifle growth.
“This makes the market feel more confident,” said Alan Rechtschaffen, financial advisor at UBS Wealth Management Americas. “What the Fed is telling you is that they're in no rush to raise interest rates right now.”
The Dow Jones industrial average gained 31.26 points, or 0.2 percent, to 17,935.74. The Standard & Poor's 500 index rose 4.15 points, or 0.2 percent, to 2,100.44. The Nasdaq composite rose 9.33 points, or 0.2 percent, to 5,064.88.
Bond prices rose after Fed released its statement, reversing an earlier sell-off.
Fed Chair Janet Yellen said in a press conference after a two-day policy meeting that that the central bank needs to see more gains in employment and stronger signs of inflation before it raises interest rates from their historically low levels.
She didn't provide a timetable for when the Fed would begin raising rates, but most economists expect the central bank will start lifting rates later this year.
“With the Fed continuing to maintain a low interest rate environment, that will allow the stock market to continue to be in a place where it can do well until such time as you can have liftoff from the economy that brings companies and earnings to a better place,” said Rechtschaffen of UBS.
Eight of the 10 sectors in the S&P 500 index ended the day higher, with utilities leading the gains. The sector rose 0.9 percent, but remains down 9.7 percent this year.
The major stock indexes remain close to their record highs set in May, but have sagged in the past month as investors have focused on the Fed.
The Dow is still up 0.6 percent this year despite dropping 2 percent from its last record close on May 19. The S&P is up 2 percent for the year and off 1.4 percent from its high on May 21. The Nasdaq is faring the best. It's up 6.9 percent this year and off less than 1 percent from its most-recent high May 27.
The yield on the 10-year Treasury note fell to 2.31 percent from 2.38 percent just before the statement was released.
Aside from the Fed, investors were also keeping an eye on negotiation between Greece and its lenders.
Greece remains deadlocked in talks with its creditors Wednesday and there was little sign of a breakthrough a day ahead of a meeting of the 19 finance ministers from countries that use the euro. Greece needs to get more loans before the end of the month, when its bailout program expires and it is scheduled to make a big payment to the International Monetary Fund.
European markets have slumped in the last month as the talks have failed to produce an agreement. Greek markets are suffering the most. Greece's benchmark index sank 3 percent Wednesday and is down 18 percent this year.
Yields on Greek government bonds have also surged as investors' confidence in the country's ability to pay its debt has waned. The yield on the Greek 10-year government bond has climbed to 13 percent from 6 percent a year ago.
Back in the U.S., investors welcomed the latest round of corporate deals.
Shares in Kythera Biopharmaceuticals surged 22.1 percent on news that Botox maker Allergan has agreed to buy the California drugmaker for about $2.1 billion. The deal would add an injection that reduces “double chin” to Dublin-based Allergan's portfolio of products. Kythera jumped $13.39 to $74.11. Allergan added 77 cents to $298.79.
Medical technology company Hill-Rom Holdings climbed 6.3 percent after it agreed to buy privately held rival Welch Allyn for about $2.05 billion in a cash-and-stock deal. The stock gained $3.32 to $55.70.
In energy trading, the price of U.S. oil ended nearly flat Wednesday after a volatile day of trading. Oil prices had sagged after the Energy Department's weekly supply report showed a surprise increase in gasoline inventories.
Benchmark U.S. crude fell 5 cents to close at $59.92 a barrel in New York. Brent crude, a benchmark for international oil used by many U.S. refineries, rose 17 cents to close at $63.87 in London.
In metals trading, gold prices slipped $4.10, or 0.3 percent, to $1,176 an ounce. Silver fell 2 cents to $15.95 an ounce and copper dropped 1 cent to $2.60 an ounce.