Wall Street enjoyed a solid advance Tuesday after the Federal Reserve raised short-term interest rates for the 10th time in more than a year but changed its policy statement to say longer-term inflation expectations are well contained. The market took the Fed statement as a hoped-for sign that the central bank's streak of rate hikes may be nearing its end.

Wall Street was also soothed as crude oil futures fell 87 cents on the New York Mercantile Exchange.

Investors also cheered Labor Department data showing workforce productivity rose at a slower rate than it had in the first quarter. Labor costs also grew at a slower rate than the previous nine months. Analysts are looking for the economy to grow at a moderate pace, since torrid growth might lead to inflation and even more interest rate hikes than anticipated.

The Dow Jones industrial average rose 78.74, or 0.75 percent, to 10,615.67 after three days of losses.

Broader stock indicators also advanced. The Standard & Poor's 500-stock index rose 8.25, or 0.67 percent, to 1231.38, and the Nasdaq composite index rose 9.80, or 0.45 percent, to 2174.19.

In its policy statement, the Fed repeated its previous view that "pressures on inflation have stayed elevated" but added that "core inflation has been relatively low in recent months and longer-term inflation expectations remain well-contained."

The market has spent most of the year nearly flat, which suggests investors are worried about energy costs, consumer spending, housing and the economy, in addition to interest rates, said Jeffrey N. Kleintop, chief investment strategist for the investment firm PNC Advisors in Philadelphia.

After strong second-quarter earnings and months of positive economic data, the market's consensus is that the Fed's rate hikes are justified.


May Department Stores fell 13 cents, to $40.07, after saying second-quarter profit fell by nearly half.

Cisco Systems rose 36 cents, to $19.61, then reported a 12 percent rise in profit. Shares were climbing after-hours.

Delta Air Lines fell 28 cents, to $1.95, after Merrill Lynch downgraded its stock to "sell."


New York Stock Exchange composite index rose 52.87, to 7505.58.

American Stock Exchange index rose 1.09, to 1631.60.

Russell 2000 index of smaller-company stocks rose 0.88, to 660.48.


NYSE: 1.94 billion shares, up from 1.8 billion on Monday. Advancers outnumbered decliners 4 to 3.

Nasdaq: 1.47 billion shares, up from 1.47 billion. Advancers outnumbered decliners 10 to 9.


Light, sweet crude oil for September delivery: $63.07, down 87 cents.

Gold for current delivery: $434.20 a troy ounce, down from $434.70 on Monday.