The Fed left its key lending rate range unchanged at between zero and 0.25 per cent for at least the next two meetings, while it signalled that its $600-billion Treasury bond-buying program will end in June as planned because the economy has strengthened and companies are starting to hire more.
Federal Reserve chairman Ben Bernanke held a historic news conference, the first time in the Fed's 98-year history that a chairman has begun holding regular sessions with reporters.
"The economic recovery is proceeding at a moderate pace and overall conditions of the labour market are improving gradually," the Fed said in a statement.
The Canadian dollar was up 0.16 of a cent to 105.22 cents US, rebounding from an earlier loss of nearly half a cent. Gold prices surged $13.60 to a new closing high of $1517.10 after the Fed said it would keep its key interest rate near zero, stoking fears of a weaker dollar and inflation.
Wall Street markets rebounded into positive territory after the Fed announcement that ended a two-day meeting.
The Dow Jones industrial average gained 95.59 points to 12,690.96, while the Nasdaq index added 22.34 points to 2,869.88 and the broader S&P 500 index gained 8.42 points to 1,355.66.
The Fed has been making bond purchases intended to lower loan rates, encouraging spending and boost stock prices. But critics worried that the purchases would feed inflation. Bernanke acknowledged a spike in oil prices, but concluded that the pickup in inflation will be temporary.
North American stock market rallies were boosted by indications that the Fed "may continue to at least maintain planned liquidity levels, keeping the easy money party going into the summer, Colin Cieszynski, a market analyst at CMC Markets Canada wrote in a note.
"A positive US durable goods report... and positive reaction to corporate earnings also appear to be putting wind into the optimists’ sails," he added.
Wednesday was another busy earnings day for Canadian and U.S. companies.
Open Text Corp. (TSX:OTC) reported after markets close that it net income was US$35.8 million or 61 cents per share, beating analysts expectations. Shares closed up 54 cents at $60.88.
Barrick Gold Corp. (TSX:ABX) said first-quarter net earnings rose 22 per cent to $1 billion, or $1 per share, compared to $820 million, or 82 cents per share, a year earlier. Analysts had predicted an average of $1.04 earnings per share. Shares were up 59 cents cent to $48.34.
Husky Energy Inc. booked a 70 per cent increase in first-quarter profits to $626 million, or 70 cents per share, compared with $368 million, or 43 cents per share in the same period a year earlier. Analysts were on average expecting earnings of 52 cents per share. Shares were up 22 cents to $28.71.
Sherritt International Corp. (TSX:S) profits soared 116 per cent to $63.6 million or 22 cents per share in the first quarter, compared with $29.4 million or 10 cents per share in the same 2010 quarter. Shares lost four cents to $7.71.
Tembec (TSX:TMB) posted a second-quarter profit of $7 million, or seven cents per share, compared to nil in the same period of 2010. Sales declined to $452 million from $476 million. Shares gained seven per cent or 35 cents to $5.68.
Shoppers Drug Mart Corp. (TSX:SC) reported its first quarter net profits fell to $118 million or 54 cents per share from $122 million or 56 cents in the same 2010 period. First quarter sales increased 2.7 per cent to more than $2.3 billion. Shares fell 66 cents to $40.76.
Canadian National Railway (TSX:CNR) shares were up 45 cents to $71.45 after it reported Tuesday adjusted net income was $414 million, or 90 cents a share, above analyst expectations.
Rogers Communications Inc. (TSX:RCI.B) said Wednesday it's rolling out an even faster wireless network this year to serve its mobile phone and mobile Internet users. It reported late Tuesday adjusted net income was 76 cents per share, beating analysts' expectations for 72 cents per share. Rogers shares gained 57 cents to $35.26.
Meanwhile, oil prices gained 55 cents to US$112.76 a barrel on the New York Mercantile Exchange. The energy sector on the TSX closed down 0.4 per cent with shares in Canadian Natural Resources (TSX:CNQ) down 26 cents at C$43.60.
Copper prices fell nine cents to $4.26 a pound on reports that China may make additional moves to rein in its economy and slow resource demand. The base metals mining sector was one of the biggest decliners on the TSX, down 0.8 per cent, with shares in Teck Resources Ltd. (TSX:TCK.B) down 79 cents to $52.40.
In U.S. corporate news, big names such as Boeing Co. and Whirlpool Corp. reported better-than-expected earnings. For the latest updates PRESS CTR + D or visit Stock Market news Today
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