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The U.S. Federal Reserve turned stocks around on Wednesday, following a commitment to keep its key interest rate lower for longer than it had indicated previously – a move that took markets by surprise.

The Dow Jones industrial average closed at 12,758.85, up 83.10 points or 0.7 per cent – marking a 180-point turnaround from its low point earlier in the day, when it was weighed down by some disappointing earnings reports and ongoing concerns about Greece. The broader S&P 500 closed at 1326.06, up 11.41 points or 0.9 per cent. In Canada, the S&P/TSX composite index closed at 12,539.21, up 143.97 points or 1.2 per cent.

Markets had been weak at the start of trading, threatening to send the Dow into a three-day losing streak. However, the release of the Fed's monetary policy statement at midday, followed by a press conference by Ben Bernanke, marked a dramatic turnaround that continued throughout the afternoon – largely because the Fed said it would keep its key interest late at exceptionally low levels until at least the end of 2014. In previous statements, the Fed had said that the era of low rates would likely end in mid-2013.

The news reversed U.S. government bond prices. The yield on the 10-year U.S. Treasury bond (which moves in the opposite direction to price) fell back below 2 per cent. Gold also jumped: After being down earlier in the day, it rose to $1,700.10 (U.S.) an ounce, up $35.60.

Canadian gold producers were among the biggest winners. Barrick Gold Corp. rose 5.8 per cent and Goldcorp Inc. rose 6.4 per cent.

Among U.S. stocks, Apple Inc. rose 6.2 per cent after announcing on Tuesday evening quarterly earnings and revenues that demolished analysts' expectations.

However, gains were broad, lifting all 10 subindexes within the S&P 500 as investors accepted ongoing low interest rates as bullish for corporate profits -- despite lower economic growth projections from the Fed for this year and 2013.

Boeing Co. rose 0.6 per cent, reversing a decline in early trading when the aerospace company reported a 20 per cent gain in quarterly earnings but forecast a weak year. Caterpillar Inc. rose 2.6 per cent and Alcoa Inc. rose 2 per cent.

In other moves, EnCana Corp. surged 10 per cent and Research In Motion Ltd. – beaten up on Monday and Tuesday after a management shakeup seemed to point to little new direction for the BlackBerry maker – rebounded 8.1 per cent.

However, Canadian banks were weak: Royal Bank of Canada and Canadian Imperial Bank of Commerce fell 1 per cent each.

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