Wall Street shakes off doubts, powers higher

US stocks raced higher Wednesday as investors shrugged off doubts about the pace of economic recovery and looked to a Federal Reserve policy announcement later in the day.

The Dow Jones Industrial Average climbed 135.35 points (1.39 percent) to 9,907.26 at 1555 GMT, coming off a mixed session for Wall Street on Tuesday.

The Nasdaq composite vaulted 21.93 points (1.07 percent) to 2,079.25 while the broad Standard & Poor's 500 index increased 14.51 points (1.39 percent) to 1,059.92.

The market was focusing on the outcome of a two-day Federal Open Market Committee (FOMC) policy meeting. Most expected the central bank to hold its near-zero interest rate policy, but were watching for any change in language that could indicate a so-called exit strategy from the stimulative effort.

- On recent FOMC days, the market has shown a propensity to trade with a positive bias ahead of the decision - said Patrick O'Hare at Briefing.

Fred Dickson at DA Davidson & Co. said the market may be showing a delayed reaction to a huge investment in Burlington Northern Santa Fe railway by billionaire Warren Buffett on Tuesday.

The move - should provide a much-needed lift for investor confidence in the US economy and the stock market - he said.

Dickson said most investors are banking on the Fed keeping its ultra-accommodative base rates of zero to 0.25 percent to support a fragile economic recovery.

- Although the economy continues to show signs of incremental growth, it seems premature for the Fed to lay out a timetable for action with unemployment continuing to climb - he said.

There was little reaction to the day's economic news.

Payrolls firm ADP said its survey showed the US private sector shed 203,000 jobs in October, the seventh month in a row that employment declines were smaller than in the previous month.

A purchasing managers survey by the Institute of Supply Management said the US services sector, which makes up the bulk of the nation's economy, expanded in October for the second month running but at a slower pace.

The ISM said its non-manufacturing index dipped to 50.6 percent last month, after 50.9 percent in September. Any number over 50 indicates growth.

Among stocks in focus, Time Warner rose 3.05 percent to 31.08 dollars after the media-entertainment behemoth posted a 38 percent decline in quarterly net profit but boosted its outlook.

Sector rival Walt Disney leapt 3.37 percent to 28.55 dollars after Chinese authorities gave long-awaited approval to the firm to build a theme park in the booming metropolis of Shanghai.

Merck rallied 5.25 percent to 32.28 dollars after the pharmaceutical giant said it completed its acquisition of Schering Plough to become the world's number two drugmaker.

Kraft Foods fell 2.69 percent to 26.80 dollars after reporting a 40 percent drop in quarterly earnings that disappointed the market.

Bonds dropped. The yield on the 10-year US Treasury bond rose to 3.486 percent from 3.473 percent Tuesday and that on the 30-year bond increased to 4.346 percent from 4.337 percent. Bond yields and prices move in opposite directions.