U.S. Markets Rally Into Fed Decision, Then Rally After

New York, NY (AHN) - All three major indices opened the session higher and continued that way sparked first by better than expected data out of the service sector and then by the Federal Reserve's decision to leave rates unchanged.

Shortly after the markets opened, The Institute of Supply Management (ISM) said the activity reading for July was 49.5, above the 48.2 reading in June and higher than the 49.0 economists expected. The news helped propel stocks higher coming into the fed rate decision at 2:15 p.m. ET. The markets then rallied again when the Federal Reserve said it would leave the federal funds rate at 2 percent.

Meanwhile, Oil traded lower for most of the session, losing $2.24 a barrel to settle at $119.17.

All told, economic news and falling oil helped the Dow Jones Industrial average rise 332 points, nearly 3 percent to 11,615. 29 of 30 Dow components traded higher, American International Group (AIG) was the biggest gainer, up 12 percent on the session.

The S&P 500 rose 36 points or 2.9 percent on Tuesday, marking the best one day gain for the index since April, 1. All ten major economic sectors finished the session higher.

The financials led the way as the sector rose 5.1 percent on Tuesday. Transportation was also strong, up 4.9 percent as the airline stocks rallied on the 2 percent drop in oil prices.

The Nasdaq Composite added 64 points or 2.8 percent as the semiconductor sector provided strength, gaining 3.1 percent.

Wednesday's session will see earnings from mortgage giant Freddie Mac before the open. Weekly crude oil inventories are set for release at 10:35 a.m. ET.