Stocks Rally after Fed Trims Bond Purchases

U.S. stocks closed higher on Wednesday after the Federal Reserve said the U.S. economy was doing well enough for the central bank to make further reductions to its stimulus program. The Dow Jones Industrial Average gained 98.13 points, or 0.58%, to 16,906.62. The S&P 500 added 14.99 points, or 0.77%, to 1,956.98. The Nasdaq Composite was up 25.60 points, or 0.59%, to 4,362.84.

Federal Reserve Chairwoman Janet Yellen was more kitten than lion on Wednesday, sticking to her guns that the central bank can hold short-term interest rates steady until the middle of next year and then raise them gradually, and downplaying recent strong inflation readings.

Amazon.com Inc (AMZN) Chief Executive Officer Jeff Bezos unveiled a “Fire” smartphone on Wednesday equipped with a 3D-capable screen and the ability to recognize objects, music and TV shows, hoping to stand out in a crowded field dominated by Apple Inc (AAPL.O) and Samsung Electronics .

Apple Inc. (AAPL) introduced a 21.5-inch iMac desktop Wednesday designed for entry-level users. The new model, which features an ultra-thin design, 1.4 GHz dual-core Intel Core i5 processor, Intel HD 5000 graphics, 8 gigabytes of memory and a 500 gigabyte hard drive, is priced starting at $1,099.