Fed and Apple Reignite Buying on Wall Street

(Reuters) -- Big profits from Apple and a promise from the Federal Reserve to keep rock-bottom rates for at least two more years powered the U.S. stock market higher on Wednesday.

Apple Inc led the Nasdaq to a 1 percent gain. Shares of the maker of iPhones and iPads surged to a record, making it the most valuable U.S. company in terms of market capitalization. Apple finished up 6.2 percent at $446.66.

Buying picked up after the Federal Reserve said it would keep interest rates near zero through at least 2014, which was longer than many investors anticipated. The actions were taken as a sign of the central bank's commitment to boost a sluggish economic recovery.

What caught the market off guard was obviously the fact they are going to keep rates lower for longer, said John Canally, investment strategist at LPL Financial in Boston.

This statement (on an inflation target) moves the ball slightly down the field for possible more quantitative easing later, Canally said, referring to a type of monetary stimulus.

The Fed also took an historic step of setting an inflation target of 2 percent, which brings the U.S. central bank in line with many of the world's other central banks that use an explicit benchmark for policy.

Apple was a standout in what has otherwise been a fairly lackluster earnings season. So far, 57 percent of companies reporting have beaten forecasts, while at this stage in past earnings seasons, the beat rate averaged 70 percent.

Apple shares hit an all-time high of $454.45 on results issued after Tuesday's market close that sailed past expectations. The move higher pushed Apple's market capitalization above that of Exxon Mobil , making it the largest publicly held U.S. company.

The Dow Jones industrial average <.DJI> rose 83.10 points, or 0.66 percent, at 12,758.85. The Standard & Poor's 500 Index <.SPX> was up 11.41 points, or 0.87 percent, at 1,326.06. The Nasdaq Composite Index <.IXIC> ended up 31.67 points, or 1.14 percent, at 2,818.31.

In other earnings news, both United Technologies Corp and Rockwell Automation Inc slightly missed revenue forecasts. United Tech shares closed down 0.2 percent at $77.65 and Rockwell dropped 2.9 percent to $79.42.

Another diversified manufacturer, Textron Inc , surged 14.6 percent to $24.76 after it raised its 2012 profit forecast. The S&P industrials index <.GSPI> gained 1.2 percent.

Corning Inc tumbled 10.7 percent to $13.05 as manufacturers cut back on the production of big-screen televisions that use the company's specialty glass.

Greece was hoping to reach a deal with its bondholders as talks were set to resume this week to avoid a messy default. Such an outcome could threaten the stability of other debt-laden members of the euro zone as well as the global economy.

(Reporting By Angela Moon; additional reporting by Rodrigo Campos; Editing by Kenneth Barry)