Just two days ago, the forecast for Q2 was raised from a minus 0.5% to a minus 0.3% as more and more companies reported in with higher than expected profits.  Today, with about half of the S&P companies now reporting in, that forecast was again changed, this time into positive territory -- a plus 0.8%!  The forecast on revenues remains pessimistic but at least has been slightly raised from a minus 4.0% to a minus 3.9%.  All told, this created another flurry of buying pushing the Dow up 121 points.  It also didn't hurt that the Fed's report today contained no surprises, though no revelations either.  The expectation is still solid that the first rate hike in ten years is coming before the end of 2015, but whether it will be in September or December there is still no hint.  The Fed's consistently stated policy is that the hike will come when there is solid evidence of a sustained recovery.  Every report so far has been that the recovery is steady but modest.  Today the language they used was that a sustained recovery would mean the end of volatility.  Will there ever be an end to volatility?  Not until this uncertainty over rate hikes ends.  There's a real Catch-22 going here which was reflected in the higher than average volume of 7.2 billion shares.

Markets | Wed Jul 29, 2015 4:37pm EDT

Wall Street ends higher after Fed leaves investors unruffled

BY NOEL RANDEWICH

DJ:    17,751.39  +121.12     NAS:   5,111.73  +22.53       S&P:      2,108.57  +15.32

REUTERS/BRENDAN MCDERMID

U.S. stocks finished stronger on Wednesday after the U.S. Federal Reserve said the economy and job market continued to strengthen and left its key interest rate unchanged.

The central bank's comments on the economy and inflation after its two-day pow-wow appeared to do little to drastically change wide expectations that the first rate hike will come in September or possibly December.

No move on rates was expected this week. U.S. interest rates have remained near zero for almost a decade and the Fed has said it will raise rates once it sees a sustained recovery in the economy.

"The statement tried to just give an update on the state of the economy, which is showing some modest improvement," said Guy Haselmann, head of U.S. interest rate strategy at Scotiabank in New York. "They were trying not to create extra volatility in a market already on edge."

The Dow Jones industrial average .DJI rose 0.69 percent to end at 17,751.39. The S&P 500.SPX gained 0.73 percent to 2,108.57 and the Nasdaq Composite .IXIC added 0.44 percent to finish at 5,111.73.

All 10 major S&P sectors were higher with the energy index's .SPNY 1.28 percent rise leading the way.

The S&P 500 has bounced about 2 percent higher in the past two days following a deeper near-3 percent drop over the preceding week that had been caused in part by a rout in China's stock markets.

With second-quarter earnings season more than halfway done, analysts now expect overall earnings of S&P 500 companies to edge up 0.8 percent and revenue to decline 3.9 percent, according to Thomson Reuters data.

While earnings are expected to increase this quarter, valuations remain a concern. The S&P 500 is trading near 16.9 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.

After the bell, Facebook (FB.O) and Whole Foods Market (WFM.O) dropped 4 percent and 11 percent, respectively, following quarterly reports that left investors wanting more.

During the session, Twitter (TWTR.N) shares fell 14.5 percent to a year-low of $31.24 after the microblogging company said its number of monthly average users rose at the slowest pace since it went public in 2013.

General Dynamics (GD.N) rose 3.93 percent after its earnings. It sparked a sector-wide rally across major aerospace stocks including Northrop Grumman (NOC.N), Spirit Aerosystems (SPR.N), Lockheed Martin (LMT.N) and Transdigm Group (TDG.N).

Cytec (CYT.N) soared 27.06 percent after Belgian chemical group Solvay agreed to buy the company for $5.5 billion.

Advancing issues outnumbered declining ones on the NYSE by 2.69 to 1. On the Nasdaq, the ratio was 1.28 to 1.

The S&P was chalked up 26 new 52-week highs and 1 low; the Nasdaq posted 43 new highs and 62 lows.

Some 7.2 billion shares changed hands on U.S. exchanges, above the daily average of 6.7 billion so far this month, according to BATS Global Markets.