Stocks continued to rise as Fed Chairman Jerome Powell said at a press conference that he expects the economy to continue growing moderately.
The Federal Open Market Committee (FOMC), the Fed's policy-making committee, chose to maintain the target range for the federal funds rate at 1.5 percent to 1.75 percent after concluding a two-day policy meeting, in line with market expectations. The Nasdaq Composite added 37.87 points, or 0.4%, to 8654.05.
"This reinforces our view that with the 2020 elections approaching, the Fed will keep interest rates on hold", said Joseph Brusuelas, chief economist with RSM US LLP, an audit, tax and consulting firm. The Dow Jones Industrial Average began the session at 20,909.
As widely expected, the US Federal Open Market Committee (FOMC) kept its federal funds rate target range at 1.50 to 1.75 per cent on Wednesday, signalling its intention to keep them on hold throughout 2020 amid a solid economy.
Powell reinforced the message, telling reporters that "both the economy and monetary policy right now are in a good place".
After the Fed's decision, the US dollar index, which includes a basket of currencies like the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, closed Wednesday unchanged at $97.41, but on Thursday it dropped 0.33% to $97.09 at 0700 GMT.
Eight FOMC participants expect the federal funds rate to stay where it is next year, while six of them project a rate between two and 2.25 per cent. Officials forecast their policy remains supportive of growth in coming years even with the USA and China yet to reach a trade deal, Brexit's future in question ahead of Thursday's United Kingdom election and a lackluster global economic picture. US consumer prices rose by 0.3% last month, also beating expectations. Inflation, which has remained persistently lower than the Fed's target, is seen hitting the 2 per cent level in 2021.
Also dragging the index lower was Home Depot Inc, which fell 2% as the home improvement chain forecast fiscal 2020 sales growth below Wall Street expectations.
The Trump administration and Chinese trade officials are laying the groundwork for a delay of the new tariffs set for Sunday (Dec 15), according to a report on the Wall Street Journal.
The state-backed oil major Saudi Arabian Oil Co., which was among the most closely watched stocks, gained 10% by the close of trading in Riyadh.