A decision to leave interest rates unchanged has investors envisioning cuts.

Stocks jumped after the Federal Reserve left interest rates unchanged and gave investors reason to believe the central bank might cut them yet this year.

The Federal Reserve’s Open Market Committee, as expected, left the federal funds rate unchanged at 5.25 percent for the sixth consecutive meeting. The rate is the interest banks charge each other.

Although the market mostly had factored in the steady rate, stocks soared Wednesday afternoon as the Fed’s accompanying statement dropped previous language that indicated future rate increases were possible.

Investors saw the change as a sign the central bank was considering future rate cuts.

The Dow Jones industrial average jumped to a triple-digit gain after having been flat before the Fed’s announcement.

In the last three sessions, the Dow has gained 337 points, the best three-day gain since November 2004.

Shares of Kansas City area companies rose almost across the board. DST Systems Inc., Inergy LP and Kansas City Southern all reached 52-week highs, while Seaboard Corp. reached a record high of $2,305.

Economists, though, cautioned that investors probably were getting too enthusiastic about the likelihood the Fed would cut rates anytime soon. They noted the Fed statement also expressed increased worries that inflationary pressures have risen. The statement said risks of inflation were the Fed’s “predominant policy concern.”

Analysts said the Fed appeared to acknowledge it was in a bind, caught between an economy being dragged down by troubles in the housing industry and stubbornly high inflationary pressures.

David Jones, chief economist at DMJ Advisors, said he did not expect any Fed rate changes before September at the earliest. At that time, he said if inflationary pressures have eased, the Fed might cut rates once or twice this year.

The Dow Jones industrial average rose 159.42 points, or 1.30 percent, and closed at 12,447.52, after having been little changed before the Fed announcement. It was the index’s biggest one-day gain since July 24. The Standard & Poor’s 500 index jumped 24.10, or 1.71 percent, to 1,435.04, and the Nasdaq composite index advanced 47.71, or 1.98 percent, to 2,455.92.

U.S. stocks gained some early support from Chinese stocks, which rose to a record and completed a recover from the late-February fall that sparked a worldwide sell-off.

Gains in real estate stocks lifted the benchmark Shanghai Composite Index 0.8 percent to 3,057.38, breaking the previous closing high set Feb. 26, a day before it plunged nearly 9 percent. That drop sparked declines in New York, London and through much of Asia for about a week.

In America, bonds rose following the Fed decision. The yield on the benchmark 10-year Treasury note fell to 4.53 percent from 4.55 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude settled up 36 cents at $59.61 a barrel on the New York Mercantile Exchange. A government report showed U.S. crude oil inventories rose again last week, but gasoline stocks fell more than analysts expected.

While most of Wall Street’s attention Wednesday was on the Fed, a few key earnings reports also drew interest. Morgan Stanley’s fiscal first-quarter earnings and revenue blew past Wall Street’s estimates. And FedEx Corp.’s fiscal third-quarter earnings came in stronger than expected, though the shipping company warned profits in the coming fiscal year could fall below its expectations.

Morgan Stanley rose $4.66, or 6.1 percent, to $80.77, while FedEx fell $1.30 to $110.99.

Among area companies of interest:

•Applebee’s International Inc. was up 28 cents at $25.11. The Overland Park casual-dining chain said it was closing 24 “underperforming” locations, including one in the Prairie Village Shopping Center.

• Cerner Corp. was up 54 cents at $55.54. Friedman Billings Ramsey analyst James Kumpel boosted his price target on shares of the North Kansas City health-care information software company to $60 from $53. Kumpel maintained his rating of “outperform” on Cerner.

•DST Systems was up $1.08, or 1.47 percent, at $74.65. Shares reached $74.97, topping the previous 52-week high of $74.22 on Feb. 22.

•Inergy LP reached a 52-week high of $32.03 before closing at $31.95, up 30 cents. The previous high of $31.71 was set Tuesday.

•Kansas City Southern was up 71 cents, or 2.02 percent, at $35.84. Shares closed at a 52-week high, topping Tuesday’s high by 6 cents.

•Seaboard Corp. closed at a record high of $2,305, up $97.11, or 4.40 percent. The previous high of $2,300 was set Feb. 26.

source:www.kansascity.com