"Wait-and-see" is over, for now anyway.  The Fed must have made its announcement right around 2 p.m. because, until then, everything was just sort of ho-hum.  Then suddenly it zoomed - almost 200 points - until finally settling in the last 20 minutes for a 74 point gain.  The market was expecting no further news on interest rates.  Instead, there was the pleasant surprise that there would likely be only two very modest hikes later this year, half the amount investors thought.  Oil also had a great day, zooming 6 percent on news that producers might freeze output, and that on top of news that stockpiles had grown less than expected.  It all created the lowest volatility index since early December.  All in all, sufficient reason to celebrate.  At 7.6 billion shares traded, volume was just a little below recent averages of 8.1 billion.

Markets | Wed Mar 16, 2016 6:12pm EDT

Wall St. closes at 2016 high as Fed signals fewer rate hikes

NEW YORK | BY LAILA KEARNEY

DJ: 17,325.76  +74.23       NAS: 4,763.97  +35.30       S&P: 2,027.22  +11.29

(Reuters)  The S&P 500 closed at its highest level of the year on Wednesday after the U.S. Federal Reserve left interest rates untouched and signaled fewer rate hikes in coming months.  The Fed indicated moderate U.S. economic growth and "strong job gains" would allow it to tighten policy this year with fresh projections showing policymakers expected two quarter-point hikes by the year's end, half the number seen in December.

But the U.S. central bank noted the United States continues to face risks from an uncertain global economy.

Because of that uncertainty, "the committee judged it prudent to maintain the current policy stance at this meeting," Fed Chair Janet Yellen said.

The decision to keep rates steady was in line with analyst predictions, but the Fed's tone was surprising to some.

"Most folks were looking for a slightly hawkish statement and they did not deliver in that," said Tom Porcelli, RBC Capital Markets chief U.S. economist. "It was balanced at best and probably even slightly dovish.” 

The Dow Jones industrial average .DJI closed up 74.23 points, or 0.43 percent, to 17,325.76, the S&P 500 .SPX had gained 11.29 points, or 0.56 percent, to 2,027.22 and the Nasdaq Composite .IXIC had added 35.30 points, or 0.75 percent, to 4,763.97.

The CBOE volatility index .VIX a gauge of what equity investors are willing to pay for protection against a drop on the S&P 500, closed at its lowest since early December.

Eight of the 10 major S&P sectors closed higher. Materials were up the most at 1.74 percent. Healthcare and financial stocks lagged.

The S&P energy sector .SPNY rose 1.6 percent as U.S. oil prices jumped almost 6 percent after major producers firmed up plans to discuss an output freeze and U.S. crude stockpiles grew less than expected.

In corporate news, shares of Peabody Energy Corp (BTU.N), the largest U.S. coal producer, fell 45.4 percent to $2.19. after the company said in a regulatory filing it may have to seek bankruptcy protection.

FedEx shares jumped 5.3 percent after markets closed on a strong full-year earnings forecast in its fiscal third-quarter financial results.

LinkedIn (LNKD.N) fell 4.9 percent at $109.81 and Gap (GPS.N) fell 1.4 percent to $29.28 after Morgan Stanley downgraded both stocks.

Mallinckrodt (MNK.N) dropped 6.4 percent to $55.69, continuing its slide for a second day, while fellow specialty drugmaker Endo International (ENDP.O) recouped some of its losses from Tuesday, jumping 4.1 percent to $33.91.

About 7.6 billion shares changed hands on U.S. exchanges, below the 8.1 billion average over the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by 2,462 to 590, for a 4.17-to-1 ratio on the upside; on the Nasdaq, 1,675 issues rose and 1,084 fell for a 1.55-to-1 ratio favoring advancers.

The S&P 500 posted 36 new 52-week highs and 5 new lows; the Nasdaq recorded 38 new highs and 62 new lows.