U.S. stock indexes rise 1% as Fed clears way to reduce bond purchases

Indexes: Dow, S&P 500, Nasdaq up 1% Updates close with volume, new details NEW YORK, Sept 22 Reuters - The three major U.S. stock indexes rose 1% on Wednesday as investors mostly took in stride the latest signals from the Federal Reserve, including clearing the way for the central bank to reduce its monthly bond purchases soon.

The S&P 500 gained its biggest daily percentage since July 23, and earned the highest appreciation ever.

The central bank also suggested that interest rate hikes could follow more quickly than expected and said overall indicators in the economy have continued to strengthen. Stocks started the day higher as concerns eased over a default by China's Evergrande. Evergrande's domestic unit said it negotiated a deal with bondholders to settle interest payments on a main bond.

Bank shares rose following the Fed news, with the S&P 500 index gained 2.1% on the day and S&P banks index increased 1.6% and among the biggest gainers among the sectors.

Several strategists commented on the Fed's recent comments as mixed.

So they said we're going to probably start to taper, but haven't said when and haven't said how much so we are kind of back where it was a day ago, said Paul Nolte, portfolio manager of Kingsview Investment Management in Chicago.

Those are closed questions, said he. Also, financial conditions remain very easy at this point and that's part of the reason why markets aren't going crazy at this point. Dow Jones Industrial Average rose 338,48 points, or 1%, to 34,258. 32, the S&P 500 gained 41.45 points, or 0.95%, to 4,395. 64 and the Nasdaq Composite added 150.45 points, or 1.02%, to 14,896 (non-issue) Apple and other huge technology names gave the S&P 500 its biggest boost, particularly with regards to the stock market.

On the downside, FedEx Corp tumbled 9.1% after posting a lower full year profit and as the delivery firm cut its quarterly earnings forecast.

On the NYSE, declining issues outnumbered rising ones by a 3.88 to 1 ratio : on Nasdaq, a 2.38 to 1.35 ratio favoured advancers.

The S&P 500 posted nine new 52 week highs and eight new lows; the Nasdaq Composite recorded 52 new highs and 66 new lows.

Volume was 9.91 billion shares on U.S. exchanges compared with the 9.99 billion average for the full session over the last 20 trading days.