Investing.com -- U.S. stocks surged on Wednesday afternoon after the Federal Reserve calmed markets by approving its first interest rate hike in nearly a decade, sending a signal to investors that the economy is close to recovering fully from the devastating Financial Crisis of 2008.
In a unanimous vote, the Federal Open Market Committee (FOMC) lifted its benchmark Federal Funds Rate by 25 basis points to a range between 0.25 and 0.50%. Before Wednesday's decision, the FOMC had held short-term interest rates at near zero levels for 56 consecutive meetings, a streak which dated back to December, 2008.
"This action marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression," Fed chair Janet Yellen said at a press conference in Washington.
The major indices were relatively unchanged immediately after the announcement, until a surge in financial stocks led to a sharp rally just before the close. The Dow Jones Industrial Average added 224.18 or 1.28% to 17,749.09, while the NASDAQ Composite index gained 75.77 or 1.52% to 5,071.13, as investors on Wall Street took a collective sigh relief after waiting more than a year for lift-off, following the conclusion of the Fed's comprehensive quantitative easing program.
The S&P 500 Composite index, meanwhile, rose 29.66 or 1.45% to 2,073.07, as stocks in nine of 10 sectors closed in the green. Stocks in the Utilities, Telecommunications and Consumer Goods industries led, each gaining more than 1.75% on the session.
Bolstered by the Fed announcement, Goldman Sachs Group Inc (N:GS) added 4.20 or 2.31% to close at 186.21, finishing the session as the top performer on the Dow. Goldman finished just ahead of JPMorgan Chase & Co (N:JPM), which also gained more than 2% on the session to close at 67.53. The worst performer was EI du Pont de Nemours and Company (N:DD), which fell 0.27 or 0.41% to 66.23.
The biggest gainer on the NASDAQ was Tesla Motors Inc (O:TSLA), which soared 13.42 or 6.07% to 234.51, after the U.S. Congress released a tentative $1.15 trillion spending bill, which includes a five-year extension on a federal solar subsidy. The bill, which still needs approval in the House of Representatives and the Senate, could extend wind and solar tax credits under the Solar Investment Tax Credit initiative through 2020. The worst performer was VimpelCom (O:VIP), which fell 0.14 or 4.23% to 3.17.
First Solar Inc (O:FSLR), which also stands to benefit considerably from the proposed legislation, jumped 5.79 or 9.68% to 65.62. The Arizona-based solar panel manufacturer ended the session as the top performer on the S&P 500. The worst performer was Pioneer Natural Resources Company (N:PXD), which fell 10.18 or 7.04% to 134.40.
On the New York Stock Exchange, advancing issues outnumbered declining ones by a 2,569-559 margin.
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