By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks tallied sizeable gains for
the first day in three Wednesday after the Federal Reserve noted
the economy strengthened in the third quarter, an industry report
found better-than-expected jobs growth in October and worries about
the latest upset in the European Union ebbed.
In a statement released after the Federal Open Market Committee
concluded a two-day meeting, the FOMC did not make any further
moves to ease monetary policy and Fed policy makers found the
economy has improved in the September quarter, although significant
downside risks remain.
Also, Fed Chairman Ben Bernanke reiterated during an afternoon
news conference that the Fed remains ready to take action to ensure
the recovery continues.
"Expectations for both commentary and action were zero, and we
got exactly that. The good news is the Fed was a little softer on
the economic outlook than before," said Art Hogan, market
strategist at Lazard Capital Markets.
After rising nearly 220 points, the Dow Jones Industrial Average
(DJI) closed up 178.08 points, or 1.5%, to 11,836.04, with all but
one of its 30 components in the green. Bank of America Corp.(BAC)
shares led gains with a 5% rally.
The blue-chip benchmark lost 573 points -- nearly 4.7% -- in the
prior two sessions.
The S&P 500 Index (SPX) rose 19.62 points, or 1.6%, to
1,237.90, with energy leading gains that included all 10 of its
major industry groups.
The Nasdaq Composite (RIXF) added 33.02, or 1.3%, to
2,639.98.
For every stock that fell, five rose on the New York Stock
Exchange, where 957 million shares traded. NYSE composite volume
topped 4 billion.
Investors had been on watch for any comments from the Fed chief
suggesting the central bank was poised for another round of
extraordinary stimulus, or quantitative easing. Bernanke echoed
previous statements that the Fed could do more if needed, saying
another round of mortgage-backed securities purchases was a "viable
option."
"Bernanke lived up to his presumed role as uber-dove in his
press conference, making the point several times that the economic
outlook is not good enough and that the Fed may have to take more
action," wrote Ian Shepherdson, chief U.S. economist at High
Frequency Economics.
The Fed also cut its economic growth outlook through 2013, as
was expected. But in its policy statement, it noted "economic
growth strengthened somewhat in the third quarter" and that
household spending has increased.
U.S. stocks started the session sharply higher after Automatic
Data Processing (ADP) reported U.S. companies added 110,000 workers
in October, with the bulk of the increase in private payrolls
coming in the service sector. ADP also revised higher its count for
September.
"The labor market is in better shape than we thought two months
ago, which is good news for the economy, corporate earnings and the
stock market," said Phil Orlando, chief equity market strategist at
Federated Investors.
Among notable movers, MasterCard Inc. (MA) shares gained 7%
after the payments processor reported quarterly results that
exceeded Wall Street's expectations.
Greek rescue at risk
Wall Street also weighed reports related to the Greek Prime
Minister George Papandreou's decision to hold a national vote on a
rescue plan for the nation.
Papandreou will be told that unless Greece provides clarity
about its acceptance of the latest European rescue plan, no more
money would be coming, said an European Union official cited by Dow
Jones.
And, Reuters quoted sources within the EU and International
Monetary Fund say these lenders are not willing to release Greece's
next batch of aid until after a vote is held.
French President Nicolas Sarkozy and German Chancellor Angela
Merkel "requested the pleasure of Papandreou's company, and are
reading him the riot act, the market is thinking the Greece
referendum idea doesn't fly, gets revised, gets cancelled or
Papandreou resigns," said Federated's Orlando.