US shares clawed out small gains in choppy trade overnight as investors digested the Federal Reserve's abrupt interest rate hike and the US dollar weakened, lifting commodity prices.
After sinking in early trade, the Dow Jones Industrial Average managed to rise 9.45 points (0.09 per cent) to 10,402.35 at the market close.
The technology-rich Nasdaq composite index rose 2.16 points (0.10 per cent) to 2243.87 and the broad-market Standard & Poor's 500 index advanced 2.42 points (0.22 per cent) to a preliminary close at 1109.17.
"After opening the day in the red on the heels of the surprising move by the Federal Reserve to get on the track to normalisation by increasing its discount rate, stocks have overcome," Charles Schwab & Co. said in a client note.
The Fed announced after the market's closing bell on Thursday that it was raising the rate on emergency loans to banks, known as the discount rate, by a quarter point to 0.75 per cent, effective yesterday .
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In a statement, the Fed said its action was part of changes to terms of its so-called discount window lending programs "in light of continued improvement in financial market conditions."
Some analysts pointed out that the move only surprised in terms of timing, noting that Fed chairman Ben Bernanke had already signalled last week that it was coming.
"The timing of the move is understandably stunning, but that does not mean it should have been considered surprising," said Patrick O'Hare at Briefing.com.
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