An S&P downgrade of Spain’s sovereign debt briefly shook US stock markets on Wednesday but failed to break the session’s rally, as investors welcomed the Federal Reserve’s decision to keep the benchmark interest rate near zero, announced late in the day.

Doug Robert, chief investment strategist at Channel Capital Research said: “The Fed accomplished its mission. It did not want to excite the markets and it didn’t. Investors have had enough excitement this week with what’s going on in Greece and Spain, and the Goldman hearings.”

The main indices moved slightly higher in reaction to the announcement.

After the closing bell, the S&P 500 was up 0.7 per cent at 1,191.36, the Dow Jones Industrial Average gained 0.5 per cent to 11,045.27 and the Nasdaq Composite was flat at 2,471.73.

Dow Chemical was up 5.9 per cent to $31.83 as the largest US chemicals producer said its first-quarter profit was better than expected.

Net profit, excluding non-recurring items, was 43 cents per share, beating the average analyst estimate of 30 cent per share.

JetBlue slipped 11.5 per cent to $5.77 as the domestic airline posted a $1m first-quarter loss while analysts expected a profit, as higher fuel costs hit margins.

Net losses were 1 cent per share. The average analyst estimate was for a 3 cent profit. It breaks a run of four straight profitable quarters for the airline.

Dell, the maker of personal computers, fell 0.1 per cent to $16.51 as the stock was downgraded from “buy” to “neutral” at UBS with a target price of $17.50 per share.

US-listed shares in Barrick Gold, a Canada-based bullion producer, rose 3.7 per cent to $42.17 as the company reported a first-quarter profit that more than doubled from a year ago, boosted by rising bullion prices and high demand.

Net profit excluding non-recurring items was 75 cents per share, beating the average analyst estimate of 63 cent per share. Revenues rose 44 per cent to $2.6bn.

Goodyear Tire & Rubber Co lost 1.6 per cent to $13.82 even after reporting better-than-expected first-quarter results with rising revenues across all regions.

Excluding non-recurring items, the tyre maker paid 18 cents per share. Analysts on average had expected a loss of 2 cents per share. The company warned, however, that raw materials costs would be a challenge this year.

AOL retreated 14.5 per cent to $23.96 as the company posted weak first-quarter results, hurt by falling advertising revenues. Net profit was 32 cents per share, down from 78 cents a year earlier.

The company also said it had agreed to sell ICQ, an instant messaging service operating in Russia, Germany, the Czech Republic and Israel, to Digital Sky Technologies, a Russian internet company, for $188m.

As the markets reflected on Tuesday’s testimony by Goldman Sachs’ executives in front of Congress, the bank’s stock rose 2.6 per cent to $157.01.

Banks were higher across the board.

Citigroup gained 2.5 per cent to $4.45, Bank of America rose 1.8 per cent to $17.78 and JPMorgan rallied 2.5 per cent to $43.46.

Masco, which distributes and installs home improvement products, was one of the session’s best performers as the stock climbed 5.3 per cent to $16.45 on an upgrade from “outperform” to “strong buy” at Raymond James Financial.

Homebuilders were also higher as Pulte gained 1.8 per cent to $12.86, DR Horton added 1.6 per cent to $13.62 and Lennar rose 2.2 per cent to $19.35.

The Russell 2000, an index of small caps, was 0.2 per cent higher to 722.39.

It is up 15.8 per cent since the start of the year, easily outperforming the S&P 500 index that has risen 6.8 per cent in the same period.

Wyndham Worldwide, which owns franchise rights to Days Inn and other hotels, declined 1.5 per cent to $26.22 in spite of raising its revenue and earnings forecasts for the full year, citing a strengthening domestic lodging industry.

The company has earned 35 cents per share in the first quarter, beating average estimates of 30 cents.

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