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Stocks rise as Fed says it will end bond program

NEW YORK — Stocks turned higher Wednesday after the Federal Reserve said it would end its $600 billion bond-buying program as scheduled in June because the economy has improved.

The decision, announced after the Fed’s two-day policy meeting, was widely expected on Wall Street. The Fed made no changes to the bond program and said that job market conditions “are improving gradually.” It repeated its promise to keep interest rates low for “an extended period.”

Federal Reserve Chairman Ben Bernanke will hold a news conference on the economy later Wednesday. Bernanke is expected to discuss the job market, inflation and the prospects for economic growth in the months ahead.

The Dow Jones industrial average rose 45 points, or 0.4 percent, to 12,640 in afternoon trading. It went up about 30 points shortly after the Fed’s statement came out.

The Standard & Poor’s 500 rose 1, or 0.1 percent, to 1,349. The Nasdaq composite index rose 5, or 0.2 percent, to 2,853.

Earnings results were mixed. Boeing Co. rose less than 1 percent after reporting earnings that beat analyst expectations. The airplane maker and defense contractor also said it still expects to deliver its long delayed 787 aircraft in the third quarter.

DeVry Inc. rose 7 percent. The for-profit education company reported that its earnings rose 18 percent as its revenue rose.

Broadcom Corp. fell 12 percent a day after the chip maker issued a second-quarter revenue outlook that was below analyst estimates.

Specialty glass maker Corning Inc. rose 1 percent after the company’s revenue surged on strong sales of glass for flat-screen televisions, computers and mobile devices.

Johnson & Johnson fell less than 1 percent after the health giant said it would buy medical device maker Synthes Inc. for $21.3 billion in one of the largest deals in the company’s history.

Bond prices rose slightly after the Fed’s statement came out. The yield on the 10-year Treasury note fell to 3.35 percent after the Fed released its statement, after trading at 3.37 percent minutes earlier. The 10-year yield was trading at 3.32 percent late Tuesday.

Investors were encouraged after the Commerce Department reported that businesses increased their orders for long-lasting manufactured goods by 2.5 percent in March, a bigger increase than economists had predicted.

“The manufacturing sector remains the real bright spot of the economy,” said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.

Stocks reached their highest level in nearly three years Tuesday on strong earnings results from major companies including Ford Motor Co. and Cummins Inc.

The S&P 500 reached its highest level since June 2008, while the Dow hit another high for the year. The Russell 2000 index, the benchmark for small-cap stocks, came close to its record high of 855.77 reached in July 2007.

Small-cap stocks have soared since the market’s rally began because they’re seen as having the best growth prospects as the economy recovers. The Russell 2000 gave up some of its gains on Wednesday, falling 1 point, or 0.1 percent, to 851.99.