U.S. stocks rally after Fed rate hike decision

U.S. stocks posted solid gains Wednesday as Wall Street digested the Federal Reserve's decision to raise interest rates.

The Dow Jones Industrial Average rose 112.73 points, or 0.54 percent, to 20,950.10. The S&P 500 added 19.81 points, or 0.84 percent, to 2,385.26.

The Nasdaq Composite Index was up 43.23 points, or 0.74 percent, to 5,900.05. The U.S. central bank on Wednesday raised interest rates for the third time since the 2008 global financial crisis, with the job market strengthening and inflation rising toward its target.

"In view of realized and expected labor market conditions and inflation," the Fed decided to raise the target range for the federal funds rate by 25 basis points to 0.75-1.0 percent, the Fed's policy-making committee said in a statement released after its two-day meeting.

"Our decision to make another gradual reduction in the amount of policy accommodation reflects the economy's continued progress," Fed Chair Janet Yellen said of the rate hike on Wednesday at a press conference. "The simple message is the economy is doing well."

"The press release characterizes economic activity as 'moderate' and core inflation as 'little changed', leaving investors confident the Fed is not shifting to a fundamentally more hawkish stance, and will continue to remove accommodation in a gradual manner," said Jay Morelock, an economist at FTN Financial.

On the economic front, the U.S. Consumer Price Index (CPI) for all urban consumers increased 0.1 percent in February on a seasonally adjusted basis, in line with market consensus, the Labor Department said Wednesday. Over the last 12 months, the all items index rose 2.7 percent before seasonal adjustment. The index for all items less food and energy (core CPI) increased 0.2 percent in February, which rose 2.2 percent over the past 12 months. Meanwhile, advance estimates of U.S. retail and food services sales for February 2017 came in at 474 billion U.S. dollars, an increase of 0.1 percent from the previous month, and 5.7 percent above February 2016.