Wall St holds gains as Fed keeps policy unchanged

By Chuck Mikolajczak

Federal Reserve

The Fed left interest-rate policy on hold and offered a moderately brighter economic outlook but flagged risks to growth that appeared to leave open the door for further easing.

"It's good news in the sense they are acknowledging there is some marginal improvement in the economy here right now," said Karl Mills, president of Jurika, Mills & Keifer Investment Partners in Oakland, California.

"There didn't seem to be any reason for (additional easing) other than to say we are there with the fire hose of last resort and we will do whatever we need to do support the economy ultimately."

Mills said investors will focus on the G20 meeting in France and the effort to contain Greece's debt crisis.

Europe's financial condition was a wild card for markets as Greek Prime Minister George Papandreou was to meet French and German leaders to discuss the implementation of the bailout for Greece. Papandreou's call for a Greek referendum on the $178 billion bailout package, now endorsed by his cabinet, sent stocks and the euro tumbling on Tuesday.

Data earlier on Wednesday showed U.S. private employers added more jobs than expected last month. A separate report showed layoffs planned by companies dropped sharply, bolstering the view that the economy is on a path of slow growth.

The energy and financial sectors were among the best performers on Wednesday after having led the market lower in the previous two sessions.

The Dow Jones industrial average gained 142.55 points, or 1.22 percent, to 11,800.51. The Standard & Poor's 500 Index rose 14.40 points, or 1.18 percent, to 1,232.68. The Nasdaq Composite Index advanced 20.53 points, or 0.79 percent, to 2,627.49.

Citigroup Inc gained 3.2 percent to $29.79 and JPMorgan Chase & Co added 1.6 percent to $33.23. The KBW Bank index climbed 2.2 percent.

MasterCard Inc shares jumped 7.1 percent to $358.11 after the credit card processor reported its quarterly profit easily beat estimates on double-digit increases in volumes.

Chairman Ben Bernanke will hold a news conference at 2:15 p.m. (1815 GMT).

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)