* Investors eye FOMC statement on rates and economy
* Services sector up for second month in a row
* U.S. private sector sheds jobs at slowest pace in yr
* Dow up 1 pct, S&P up 0.7 pct, Nasdaq up 0.2 pct
* For up-to-the-minute market news, click [STXNEWS/US] (Updates with Fed announcement, changes byline)
By Chuck Mikolajczak
NEW YORK, Nov 4 (Reuters) - U.S. stocks briefly touched session highs on Wednesday after the Federal Reserve said it would keep borrowing costs near zero for “an extended period” even though it expressed confidence the U.S. economic recovery was gaining momentum.
The Fed kept its benchmark federal funds rate unchanged in a range of zero to 0.25 percent, as expected, and said the economy has “continued to pick up” since its last policy meeting in September. For details, see [ID:nN04453484]
“It was expected, absolutely expected. Nobody thought the Fed was going to raise interest rates. The unemployment rate is too high. There is no sense of any inflation anywhere, now or in the future,” said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California.
The Fed’s closely watched policy statement was somewhat more upbeat than its statement in September. However, it was also more explicit about why it expects to keep rates low, citing “low rates of resource utilization, subdued inflation trends, and stable inflation expectations.”
“It’s a very positive statement,” Springer added. “The longer the Fed can keep interest rates low, the better it is for the economy.”
The Dow Jones industrial average .DJI advanced 98.09 points, or 1 percent, to 9,870.00, after rising 1.4 percent following the Fed's statement. The Standard & Poor's 500 Index .SPX gained 7.27 points, or 0.70 percent, to 1,052.68. The Nasdaq Composite Index .IXIC added 4.68 points, or 0.23 percent, to 2,062.
In the hour following the FOMC statement, the S&P 500 rose as high as 1,061.00 and the Nasdaq touched 2,081.00. With less than 30 minutes before the closing bell, though, those late-day gains began to fade somewhat.
The healthcare sector jumped on hopes the Obama administration’s healthcare reforms may be slowed after Republicans scored some key election victories.
Healthcare stocks also got a lift from Wellcare Health Plans Inc WCG.N, which jumped 10.2 percent to $29 after the managed care company posted a quarterly profit above analysts' estimates even as membership fell about 8 percent from a year earlier. [ID:nBNG291662]
Wall Street opened higher after a private-sector report from ADP showed signs of improvement in the labor market. The three major U.S. stock indexes extended gains following a strong reading on the U.S. services sector from the Institute for Supply Management. [ID:nN04349022] (Reporting by Chuck Mikolajczak; Editing by Jan Paschal)