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US stocks jump as market sees Fed support staying

Traders work on the floor at the New York Stock Exchange on June 21, 2013 in New York
Traders work on the floor at the New York Stock Exchange on June 21, 2013 in New York. US stocks Wednesday surged after investors took a reduced estimate of US first-quarter economic growth as a sign the Federal Reserve would maintain its aggressive bond-

US stocks Wednesday surged after investors took a reduced estimate of US first-quarter economic growth as a sign the Federal Reserve would maintain its aggressive bond-buying program.

The Dow Jones Industrial Average jumped 149.83 (1.02 percent) to 14,910.14.

The broad-based S&P 500 rose 15.23 (0.96 percent) to 1,603.26, while the tech-rich Nasdaq Composite Index added 28.34 (0.85 percent) to 3,376.22.

The gains came after the Commerce Department slashed its estimate for first-quarter growth from 2.4 percent to 1.8 percent.

Investors "now understand that the Fed is only going to pull back on its QE if the economy is continuing to improve," said Michael James, managing director of trading at Wedbush Morgan Securities.

"If we are not seeing economic improvement, the Fed is not going to remove their QE."

Analysts said the market was also primed to rally after a steep sell-off last week, brought on by worries then of a pullback in Fed stimulus.

Big companies posting large gains included Microsoft (up 2.1 percent), Boeing (up 2.1 percent) and Johnson & Johnson (up 1.9 percent).

General Mills fell 0.5 percent after forecasting that 2014 earnings would come in at $2.87-$2.90 per share, below the $2.93 seen by analysts.

Agrotech giant Monsanto dropped 0.6 percent after revenues came in at $4.2 billion, below the $4.4 billion forecast by analysts. Profits were six cents per share above the $1.60 expected.

Coal producers Arch Coal (-5.0 percent), Consol Energy (-3.0 percent) and Peabody Energy (-3.3 percent) continued to sink in the wake of the Obama administration's climate policy announced Tuesday, which could force costly investments in clean technologies and promotes rival energy sources.

Generic pharmaceutical manufacturer Mylan edged 0.3 percent higher after announcing it would launch a generic version of sexual dysfunction drug Viagra in 11 European countries.

Bond prices jumped. The yield on the 10-year US Treasury fell to 2.54 percent from 2.59 percent Tuesday, while the 30-year fell to 3.57 percent from 3.61 percent. Bond prices move inversely to yields.

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