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New York - US stocks jumped more than 1% after the Federal Reserve announced the first interest rate hike in nine years Wednesday and promised a gradual approach to future rate increases.
The Dow Jones Industrial Average jumped 224.18 points to 17 749.09.
The broad-based S&P 500 rose 29.66 points to 2 073.07, while the tech-rich Nasdaq Composite Index advanced 75.78 points to 5 071.13.
The Fed raised the benchmark federal funds rate, locked near zero for seven years to support recovery from the Great Recession, by a quarter point to 0.25-0.50%, saying the economy is growing at a moderate pace and should accelerate next year.
Analysts praised the Fed for supplementing its first rate hike since June 2006 with a pledge to take a "gradual" approach to future increases.
"What the market appreciates is the word 'gradual'," said Gregori Volokhine, president of Meeschaert Capital Markets. "There is no surprise here."
"The markets were poised to go higher on the Fed decision if there was nothing surprising," said Michael James, managing director of equity trading at Wedbush Securities.
"The lack of any negative surprise is the reason the market is acting so well."
Major banks gained. Bank of America rose 1.8% and Citigroup 2.6%. Both BofA and Wells Fargo were among the banks that announced they were hiking the prime lending rate to 3.5% from 3.25% in the wake of the Fed's move.
Industrials were also strong. General Electric rose 2.2%, Ford 3.5%, Honeywell International 5.7% and copper producer Freeport-McMoRan 2.6%.
Valeant Pharmaceuticals International advanced 8.1% despite slashing its fourth-quarter forecast. BMO Capital Markets said the projection was "probably conservative".
CVS Health gained 5.4% as it raised its 2016 profit forecast and announced a 21% increase in its dividend.
Solar stocks rose in anticipation that a tax and budget bill winding through the US Congress would include an extension of key tax credits for renewable energy. SolarCity soared 34.1%, SunEdison 25.5% and First Solar 9.7%.
