U.S. stocks rose sharply Thursday, extending gains a day after the Federal Reserve offered no surprises, signaling that it is on track to start scaling back bond purchases this year, and perhaps raise interest rates next year, assuming a continued economic recovery from the pandemic.

  • The Dow Jones Industrial Average rose 514.98 points, or 1.5%, to 34,773.30.
  • The S&P 500 gained 55.13 points, or 1.3%, to trade at 4,450.77.
  • The Nasdaq Composite traded at 15,032.73, up 135.88 points, or 0.9%.

On Wednesday, the Dow Jones Industrial Average rose 338 points, or 1%, to 34,258, while the S&P 500 and the Nasdaq Composite also rallied 1%. Daily gains for the Dow and S&P 500 were the strongest in two months.  Equities were rising a day after Fed Chairman Jerome Powell said plans to taper the central bank’s bond- buying program could be announced in November, and officials also penciled in an interest-rate increase in 2022. Still, the Fed didn’t upset the market’s apple cart, said observers. “The market hates uncertainty, and it got more certainty yesterday from the Fed in terms of its plans,” even though the underlying message was perhaps a bit hawkish, Ryan Jacob, chief executive and chief investment officer at Jacob Asset Management, told MarketWatch in a phone interview. With the Fed out of the way for now, investors were set to turn their attention to third-quarter earnings season, Jacob said, arguing that results should be “generally strong,” though the spread of the delta variant of the coronavirus is likely to take some toll on sectors and industries more sensitive to the economic cycle. In U.S. economic data Thursday, the Labor Department said initial claims for jobless benefits rose by 16,000 to 351,000 in the week ended Sept. 18. Economists polled by The Wall Street Journal had estimated new claims would total 320,000. The rise appeared to be driven in party by California catching up on a large backlog of claims. Private-sector activity in the U.S. economy continued to expand but at a slower pace September, according to the IHS Markit flash U.S. Composite Output Index, which fell to a 12-month low of 54.5, down from 55.4 in August. A reading above 50 indicates an expansion in activity.mThe Conference Board said its Leading Economic Index rose 0.9% in August to 117.1. Meanwhile, global investors were cheered as the People’s Bank of China injected another 110 billion yuan, or $17 billion, into the financial system on Thursday, according to news reports, after a large injection on Wednesday.