Stocks end higher on Fed's economic assessment

US stocks reversed an early slide and ended higher today after the Federal Reserve issued a more upbeat assessment of the economy.

Major stock indexes were down before the Fed released its statement following a two-day meeting on interest rates, then advanced as investors digested the central bank’s comments. Treasury prices also reversed direction, falling after the announcement as investors withdrew money from safe haven holdings.

The Fed said it believed “economic activity has continued to strengthen” since its last meeting in December. However, the Fed did not repeat its assertion that the housing market was improving.

The Fed said it was leaving interest rates near zero, as expected, but also that Kansas City Federal Reserve president Thomas Hoenig had voted against the decision to keep rates low.

Jamie Cox of Harris Financial Group in Colonial Heights, Virginia, said Hoenig’s vote signalled the central bank was moving closer to boosting rates.

“That means there are a couple of people who feel like that the economy is getting better at a nice rate that no longer warrants these exceptionally low rates,” he said.

Stocks had fallen ahead of the Fed’s announcement as the Commerce Department said sales of new homes fell 7.6% in December.

According to preliminary calculations, the Dow Jones industrial average rose 41.87, or 0.4%, to 10,236.16. It was down 40 ahead of the Fed’s statement.

The Standard & Poor’s 500 index rose 5.33, or 0.5%, to 1,097.50, while the Nasdaq composite index rose 17.68, or 0.8%, to 2,221.41.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.64% from 3.63% late Tuesday.