Dow Jones Industrial Average Gains In Anticipation Of New Signal From US Federal Reserve

This story was updated at 4:30 p.m. EDT.

U.S. stocks closed upward on Wednesday after the Federal Reserve left U.S. interest rates unchanged but signaled a solid chance of a rate liftoff in December. In Europe, the Swedish central bank’s announcement Wednesday it was increasing its bond-buying program to spur economic growth helped cap three-days of losses in key European markets.

U.S. Federal Open Market Committee’s statement on Wednesday said it will be “determining whether it will be appropriate to raise the target range at its next meeting,” which is scheduled for December 15-16.

“Fears about a collapse in China’s economy have faded a little in recent weeks and US stock markets have now largely recovered the losses sustained during the slump in late August,” Paul Ashworth, chief U.S. economist for Capital Economic, said in a research note. “But the dollar and corporate bond yields are still significantly higher, so broader financial conditions remain tighter than they were earlier this year.”

The Dow Jones Industrial Average (INDEXDJX:.DJI) gained 198.09 points, or 1.13 percent, to 17,780 on Wednesday. The S&P 500 index (INDEXSP:.INX) advanced by 24.46 points, or 1.18 percent, to 2,090. The Nasdaq composite (INDEXNASDAQ:.IXIC) rose 65.54 points, or 1.30 percent, to 5,096.

Eight out of 10 S&P 500 sectors closed up Wednesday led by energy and financial services stocks. Apple Inc. (Nasdaq:AAPL) led gains among the Dow 30 industrials while Procter & Gamble (NYSE:PG) led declines.

U.S. company news was dominated Wednesday morning by Apple Inc.’s solid performance in its July-September quarter and the announcement that pharmacy chain Walgreens Boots Alliance Inc. (Nasdaq:WBA) would buy smaller rival Rite Aid for more than $9.4 billion. Walgreens also reported higher-than expected July-September quarterly earnings.

Walgreens’ shares retreated by more than 10 percent Wednesday, to $84.95, after a more than 6 percent jump Tuesday after the deal was annouced. Rite Aid Corporation (NYSE:RAD) also fell back, by nearly 7 percent, to $8.07, after rising nearly 43 percent from around $6 a share before the deal was made public. Under the deal, Rite Aid shareholders will receive $9 a share, nearly 50 percent above the company’s closing price on Monday. Rite Aid shares are up more than 7 percent for the year while Walgreens shares have advanced nearly 12 percent in the same period of time.

Other major U.S. company movements Wednesday morning include health benefits provider Anthem Inc. (NYSE:ANTM), whose July-September quarterly profits beat estimates by 40 cents per share, to $2.73. The company cited strength from government and commercial business health insurance deals. Shares dropped 2 percent Wednesday, to $141.80 on lower expectations for the current quarter. Anthem’s stock is up more nearly 13 percent for the year.

Northrop Grumman Corporation (NYSE:NOC) rallied by 5.48 percent after the Virginia-based defense contractor reported higher-than expected earnings for its July-September quarter. Revenue was also above Wall Street forecasts. The earnings report released Wednesday morning came a day after the U.S. Air Force selected Northrop Grumman to build its next long-range bomber. Northrup’s shares are up nearly 30 percent for the year.

Stock in Diamond Foods Inc. (Nasdaq:DMND) -- the Stockton, California, maker of Pop-Secret microwave popcorn and Kettle brand potato chips – leaped by nearly 9 percent after North Carolina-based maker of Cape Cod potato chips and Tom’s snacks, Snyder's-Lance Inc. (Nasdaq:LNCE), would acquire Diamond in a cash and stock-merger deal worth $1.91 billion. Snyder's-Lance’s shares dropped by nearly 8 percent on the announcement.

Hershey Co. (NYSE:HSY) shares dropped after the Pennsylvania chocolate confectionery posted a 31-percent fall in quarterly profit on lower demand for sweets from North American consumers. Hershey’s share price has retreated by about 15 percent this year.

Stock in microblogging social networking site Twitter Inc. (NYSE:TWTR) fell 1.53 percent a day after reporting disappointing user-count numbers, a key metric for tech companies that base their revenue on user growth. Twitter shares are down nearly 14 percent for the year.