Richard Drew, Associated Press
Specialist Edward Loggie works at his post on the floor of the New York Stock Exchange as the rate decision of the Federal Reserve is announced, Wednesday, Dec. 16, 2015.

NEW YORK — Stocks are edging higher Wednesday afternoon after the Federal Reserve raised interest rates, a long-expected vote of confidence in the health of the U.S. economy. The announcement gave the markets a small boost.

Keeping score: The Dow Jones industrial average rose 100 points, or 0.6 percent, to 17,620 as of 2:35 p.m. Eastern time. The Standard & Poor's 500 index gained 13 points, or 0.7 percent, to 2,056. The Nasdaq composite index added 27 points, or 0.6 percent, to 5,023.

The market rose slightly after the Fed's announcement. The biggest gainers were utilities and consumer staples stocks, which rose 2.3 percent and 1.4 percent, respectively.

Fed raises rates: As most investors anticipated, the Federal Reserve raised its main interest rate by a quarter of a point. That rate had been near zero for seven years. For months the Fed has been suggesting it would make that move because the U.S. economy has improved a great deal since the financial crisis and the Great Recession.

The Fed said Wednesday that it expects the U.S. economy to keep growing and that it expects interest rates to stay low for some time. It emphasized that the performance of the economy will determine its next steps. The last time the Fed actually raised interest rates was in June 2006, before the crisis hit.

The quote: Stephen Freedman, senior investment strategist at UBS Wealth Management Americas, said the Fed is "taking off the Band-Aid" because the economy has substantially healed in the last seven years. But he said the Fed is likely to take some time restoring interest rates to normal levels because it doesn't want to hurt the economy.

"Three or four hikes next year would be, historically speaking, extremely slow and progressive," he said. "The Fed is not going to choke the economy."

Changing times: Exactly seven years ago, the Fed cut its key interest rate to nearly zero because of deteriorating conditions in the economy and in financial markets. Spending, business investment and industrial production all fell. The Fed said on Dec. 16, 2008 that the Federal funds rate would be "exceptionally low... for some time." The S&P 500 index was well under 900 points then, and now it's over 2,000. The unemployment rate, which was rising and would peak at 10 percent, is now 5 percent.

Energy prices: Oil prices and energy stocks skidded after the U.S. government said stockpiles grew 4.8 million barrels last week. The price of oil has plunged to its lowest levels in more than six years because supplies continued to rise as the global economy struggles.

Benchmark U.S. crude dropped $1.83, or 491 percent, to close at $35.52 a barrel in New York and Brent crude, a benchmark for international oils, lost $1.18, or 3 percent, to $37.53 a barrel in London. U.S. crude had climbed over the last two days after falling beneath $35 a barrel Monday.

Energy stocks: Oil and gas stocks fell. Pioneer Natural Resources lost $8.92, or 6.2 percent, to $135.66 and Devon Energy dropped $1.78, or 5.6 percent, to $30.09. Exxon Mobil declined $1.21, or 1.5 percent, to $78.22. Natural gas, which has dropped to 16-year-lows, lost 3.2 cents to close at $1.79 per 1,000 cubic feet. Natural gas has been falling as traders anticipate weaker demand for home heating due to the unseasonably warm winter weather in the U.S.

Heartland: Payment card processor Heartland Payments accepted an offer from Global Payments worth $100 per share, or $4.3 billion. Heartland provides credit, debit, and prepaid card processing and security technology services nationwide. Its shares rose $9.11, or 10.7 percent, to $94.21.

Valeant rises again: Canadian drugmaker Valeant Pharmaceuticals cut its guidance, but investors were pleased with its outlook for 2016. Its stock has lost more than half its value since reaching a record high in August as Valeant's business model and pricing came under close scrutiny from industry analysts and members of Congress. On Wednesday the shares added $7.27, or 6.6 percent, to $116.86.

Housing gains: The pace of homebuilding increased in November on a big jump in apartment construction in the Midwest and South, while construction of single-family houses reached an eight-year high. The Commerce Department said Wednesday that total housing starts climbed 10.5 percent.

Beazer Homes rose 49 cents, or 4.3 percent, to $11.98. D.R. Horton added 59 cents, or 1.9 percent, to $32.05 and PulteGroup gained 50 cents, or 2.9 percent, to $17.89.

Sweet Honeywell: Investors were pleased with the 2016 outlook from manufacturing conglomerate Honeywell, which also backed its 2015 forecast. Honeywell rose $4.85, or 4.9 percent, to $103.32.

Bonds, currencies: U.S. government bond prices, which were up earlier in the day, fell after the Fed's decision. The yield on the 10-year Treasury note reversed course and fell to 2.25 percent from 2.27 percent. The euro edged up to $1.0949 from $1.0917 late Thursday while the dollar rose to 121.82 yen from 121.73 yen.


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