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New York - The S&P 500 and Nasdaq ended higher on Wednesday after the Federal Reserve gave a rosier assessment of the US economy while reaffirming that it is in no hurry to raise interest rates.
The US central bank also, as expected, reduced its monthly asset purchases to $25bn from $35bn.
Among the biggest positives were bank shares, with the S&P financial index up 0.4%, helping to support the S&P 500. Shares of Wells Fargo gained 1.1% to $52.10.
"We got the taper as expected, and the real viewpoint of the committee is they can keep monetary policy accommodative even after we reach our inflation and employment goals," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
Biotechnology stocks boosted the Nasdaq for a second straight day. The Nasdaq biotech index was up 1% after Amgen posted better-than-expected earnings and raised its outlook, sending its shares up 5.4% to $130.01.
The Dow Jones industrial average fell 0.19% to 16 880.36 points, the S&P 500 gained 0.01% to 1 970.07 points and the Nasdaq Composite added 0.45% to 4 462.90 points.
The S&P 500 had traded lower ahead of the Fed announcement.
Earlier on Wednesday, government data showed gross domestic product grew at a 4% annualised rate in the second quarter, above the 3% rate that had been expected and a sharp reversal from the weather-impacted first quarter, when the economy contracted a revised 2.1%.
Separately, the ADP National Employment Report showed companies hired 218 000 workers in July, below analysts' projections of 230 000 and less than June's total.
Among other big gainers, Twitter surged 20% to $46.30, its biggest ever one-day advance, after reporting that monthly active users rose a better-than-expected 24% in the second quarter.
Insurance stocks fell after Humana, WellPoint and Aflac all reported lower earnings, though WellPoint's profit was above expectations.
Humana fell 5.6% to $120.34, WellPoint lost 0.1% to $112.47, and Aflac slid 2.8% to $61.38. UnitedHealth lost 1.6% to $82.95 and was the biggest drag on the Dow.
After the bell, shares of Whole Foods Markets fell 5.4% to $36.99 after the company cut its 2014 forecasts for a fourth time. Akamai Technologies declined 5.9% to $57.17 following its results.
About 6.2 billion shares changed hands on US exchanges, above the 5.6 billion average for the month to date, according to data from BATS Global Markets.
