Wall Street Jumps on FOMC Policy Statement

Developing: Wall Street capped Wednesday off in rally mode with the S&P 500 surging more than 2%, and the Dow finishing up 1.69%. All 10 sectors ended green.

Earlier version of this story below...

U.S. stocks extended gains on Wednesday after the Federal Reserve gave a strong signal that it was on track to raise interest rates sometime next year, suggesting confidence in the U.S. economy.

Following a two-day meeting, the U.S. central bank said it would take a "patient" approach in deciding when to bump borrowing costs higher. The statement came against a backdrop of solid domestic economic growth but trouble overseas.

"It's pretty upbeat on the economy, and that's what the stock market is reacting to," said John Canally, investment strategist and economist at LPL Financial in Boston.

Earlier in the day, data showed U.S. consumer prices recorded their biggest drop in nearly six years in November as gasoline prices tumbled.

All 10 S&P sectors were sharply higher, though energy was in the lead by a wide margin. The S&P energy sector <.SPNY>, which has fallen sharply with the heavy selloff in oil prices since June, was up 4.9 percent.

At 2:17 p.m. EST (1917 GMT), the Dow Jones industrial average <.DJI> rose 270.5 points, or 1.58 percent, to 17,339.37, the S&P 500 <.SPX> gained 36.99 points, or 1.88 percent, to 2,009.73 and the Nasdaq Composite <.IXIC> added 80.29 points, or 1.77 percent, to 4,628.12.

Shares of Chevron <CVX.N> were up 4.4 percent.

(By Caroline Valetkevitch; Additional reporting by Sinead Carew; Editing by Nick Zieminski and Peter Galloway)