Stocks up after wobbly afternoon

NEW YORK - The stock market ended solidly higher Wednesday, recovering from an afternoon wobble, after the Federal Reserve indicated that it will consider raising its benchmark interest rate at its December meeting. Bond yields rose and the dollar climbed against other currencies as traders anticipated that higher rates were on the way.

Federal Reserve policymakers decided to leave interest rates unchanged after a two-day meeting, but they also said they would consider raising rates at the last meeting of 2015 if the economy keeps improving.

Bob Doll, chief investment strategist for Nuveen Investments, said October and November employment data will feature prominently in the Fed's deliberations.

"If they're OK, I think the Fed will finally, finally, finally go," Doll said.

The Dow Jones industrial average had been up 130 points just before the Fed released its policy statement at 2 p.m. Eastern time, then briefly retreated into the red after the statement came out. By late afternoon the Dow more than recovered, closing up 198.09 points, or 1.1 percent, at 17,779.52. The Standard & Poor's 500 index gained 24.46 points, or 1.2 percent, to 2,090.35. The Nasdaq composite picked up 65.55 points, or 1.3 percent, to 5,095.69.

The Fed cut its benchmark interest rate to almost zero in late 2008 to stimulate the economy during the Great Recession. Although Fed Chair Janet Yellen has said she wants to start raising rates this year, the Fed struck a cautious tone in its September meeting following some rough patches in the U.S. economy and warning signs from overseas.

Investors concluded that the Fed would probably leave rates alone until next year, but the latest release shows that an increase on Dec. 16 is very possible. In its latest statement, the Fed eliminated language expressing concern about the global economy.

The prospect of higher interest rates set off a rally in banks, which stand to make more money on lending. Bank stocks in the S&P 500 jumped 2.4 percent, twice as much as the broader index.

The dollar rose against the yen and the euro. If the Fed does begin to raise rates in December, it would come as central banks in Europe and Japan continue to pursue stimulus programs. The euro fell sharply against the dollar, to $1.0925 from $1.1040 late Tuesday. The dollar rose to 121.03 yen from 120.33 yen.

In bond trading, the yield on the 10-year Treasury note rose to 2.09 percent from 2.04 percent the day earlier. Yields on Treasury notes affect rates on mortgages and many other kinds of loans.

Oil prices soared after Pemex, the national oil company of Mexico, said it received permission to swap crude oil with the U.S. That could represent a step toward ending the U.S. ban on exporting crude. The price of oil had had been sliding since early October and reached its lowest level in two months Tuesday. The 6.3 percent gain Wednesday was the largest increase since Aug. 31.

U.S. crude climbed $2.74 to $45.94 a barrel in New York. Brent crude, which is used to price international oils, rose $2.24, or 4.8 percent, to $49.05 a barrel in London.