US mkts gain as Fed leaves interest rates unchanged

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US stocks eked out a gain led by tech stocks and financials, which rebounded amid relief that the Fed's statement offered no surprises. Stocks had languished for much of the day amid some disappointing earnings outlooks and an unexpected drop in home sales but recovered in the last hour of trading. Also Read - How ADRs performed

Annualized new home sales for December declined 7.6% against expectations of 3% rise. The CBOE volatility index eased to near 23.

Apple shares rallied after CEO Steve jobs announced aggressive pricing for the new iPAD tablet computer.

In the latest round of earnings, companies continued to beat expectations but several tempered their full-year outlooks. Caterpillar was the biggest decliner on the Dow after it issued a weak 2010 outlook.

Boeing was at the top of the Dow pack after the aerospace giant swung to a profit and beat expectations with its quarterly numbers. However, it fell short with its full-year forecast.

The Dow Jones Industrial Average added 41.87 points, or 0.4%, to 10,236.16. The Standard & Poor's 500 index gained 5.33 points, or 0.5%, to 1,097.50, while the Nasdaq Composite Index added 17.68 points, or 0.8%, to 2,221.41.

After a two-day meeting, the Fed left interest rates unchanged. Policy makers kept the "extended period" language in its statement, referring to how long they will leave interest rates low. The policy statement reflected a somewhat brighter tone than it had at the previous meeting in December, although the Fed removed a reference to improvement in the housing market.

George Soros, Chairman, Soros Fund Mgmt said that, "I think it's a step in the right direction, because the banking system has to be changed. This idea of allowing total freedom has turned extremely sour. And separating investment banking from commercial banking and prohibiting in commercial banks from engaging in trading for their own account, using deposits which have implicit guarantee from the government-in fact not just implicit an explicit guarantee- that's not appropriate."

In commodities, copper prices fell the most in four months on concern that China and the US will speed up plans to unwind economic-stimulus measures. The metal fell more than 4%. Others like aluminium and zinc also lost 3 to 5%.

Crude prices fell more than 1% to near a five-week low as a government report showed inventories of gasoline rose to a 22-month high in the US. Crude is currently trading below the USD 74 mark.

The dollar traded near a six month high against the euro, with the euro falling below 1.40 for the first time since July. The dollar index is currently trading above the 78 mark.