Stocks gained on Wednesday, pushing the Dow to a 17-month high, after a benign February inflation reading supported the Federal Reserve's renewed pledge of low interest rates.

The market reacted positively to a drop in the February Producer Price Index, further supporting the near-zero interest rates that have propelled the rally in equities.

On Tuesday, the S&P 500 rose above the 1,150 level that analysts had targeted as a critical resistance point, which once surpassed, could push the market higher.

However, volume remained light before a key options expiration on Thursday and Friday, when four different types of options and futures contracts expire in a convergence known as quadruple witching.

A lot of guys, if they haven't done anything by now are just going to sit tight, said Alan Valdes, director of trading operations for Kabrik Trading in New York.

The market does not look like it wants to come in, though.

The seven-session winning streak for the blue-chip Dow is the longest since an eight-day run in August 2009, when it rose 4.9 percent. In the last seven sessions, the Dow has gained 1.7 percent, but volume has been lackluster.

Investors expect the S&P 500 to rise 10 percent during 2010, according to a quarterly Reuters poll published on Wednesday.

The Dow Jones industrial average <.DJI> gained 47.69 points, or 0.45 percent, to end at 10,733.67. The Standard & Poor's 500 Index <.SPX> rose 6.75 points, or 0.58 percent, to 1,166.21. The Nasdaq Composite Index <.IXIC> advanced 11.08 points, or 0.47 percent, to 2,389.09.

On Tuesday, the Fed left benchmark rates unchanged near zero and renewed its pledge to hold them exceptionally low for an extended period.

NIKE JUMPS LATE

After the closing bell, Nike shares advanced 3.4 percent to $73.29 after the largest global sporting gear maker posted a net profit that beat analysts' expectations.

During Wednesday's regular session, the stock of coal miner Massey Energy Co advanced 5.8 percent to $53.15 a day after it announced the acquisition of privately held Cumberland Resources Corp. Massey Energy led gains in the S&P energy index <.GSPE>, which rose 1.1 percent.

Hartford Financial Services Group Inc gained 4.8 percent to $28.58, a day after the company announced a plan to repay the U.S. Treasury. Discover Financial Services also said it would repay government bailout funds. But Discover's shares slipped 0.4 percent to $15.24.

The S&P financial sector index <.GSPF> gained 1.1 percent.

About 8.64 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 7 to 3. On the Nasdaq, more than three stocks rose for every two that fell.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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