Wall Street hits fresh 17-month high after Fed

NEW YORK (Reuters) - Stocks rose to a fresh 17-month high on Tuesday after the Federal Reserve held benchmark rates near zero and maintained its pledge to keep them low for an extended period.

The central bank also pointed to increased momentum in the economy’s recovery, and that, coupled with strength in Intel, helped the S&P 500 hit a fresh 17-month high.

“Although everything was expected here, it’s definitely a bullish sign that nothing negative came out of (the Fed) decision and the language as well,” said Cort Gwon, director of research and trading strategies at FBN Securities in New York.

Intel INTC.O ranked among the Dow's top performers, up 4 percent at $22.01 on speculation that the world's top chip maker is expected to release positive guidance for the current quarter. The Philadelphia semiconductor index .SOXX gained 2.7 percent.

General Electric Co GE.N gained 4.5 percent to $18.07 after the Dow component's chief financial officer said he expects the company's earnings and dividend to rise in 2011.

The Dow Jones industrial average .DJI gained 43.83 points, or 0.41 percent, to end at 10,685.98. The Standard & Poor's 500 Index .SPX rose 8.95 points, or 0.78 percent, to finish at 1,159.46. The Nasdaq Composite Index .IXIC added 15.80 points, or 0.67 percent, to close at 2,378.01.

The S&P 500 was able to puncture 1,150, a mark it had been unable to hold above in two previous attempts, and a level strategists cited as a significant obstacle for more gains.

“Throughout the day and the past week, we’ve been breaking out of this S&P 500 trading range of 1,050 to 1,1150 -- hopefully, we are breaking into a new trading range.” Gwon added.

Earlier in the session, stocks moved higher after Standard & Poor’s ended its review for a downgrade of Greece, saying the government’s recent deficit-reduction measures are supportive of the ratings. Concerns about Greek debt have been a drag on equities in recent weeks.

Data on Tuesday showed U.S. housing starts fell last month as winter storms in parts of the country disrupted home building, while a drop in import prices pointed to muted inflation pressures.

About 7.89 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, the third slowest day of 2010, and below last year’s estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 11 to 4, while on the Nasdaq, nearly 17 stocks rose for every 10 that fell.

Reporting by Chuck Mikolajczak; Editing by Jan Paschal