NEW YORK (CNNMoney.com) - Blue-chips jumped and the broader market inched higher Tuesday after the Federal Reserve boosted a key short-term interest rate, as expected, and hinted that an end to the rate-hiking campaign may not be far off.

As of 5:45 p.m. ET, Nasdaq and S&P futures pointed to a modestly higher open for stocks Wednesday, when fair value is taken into account.

The Dow Jones industrial average (up 55.95 to 10,823.72, Charts) and the S&P 500 (up 7.00 to 1,267.43, Charts) index both added over 0.5 percent.

The Nasdaq composite (up 4.05 to 2,265.00, Charts) added 0.2 percent, due to weakness in select technology shares.

All three major gauges had posted even bigger gains in the first hour after the 2:15 p.m. ET announcement, but lost some momentum heading into the close.

Treasury prices gained, lowering the yield on the 10-year note to 4.52 percent from 4.55 percent late Monday. Treasury prices and yields move in opposite directions.

The dollar recovered some strength after the announcement, stabilizing versus other major currencies after slipping in the morning.

"The market reaction is extremely positive," said Michael Sheldon, chief market strategist at Spencer Clarke. "What investors should take from this is that there is light at the end of the tunnel and that the end of the cycle should happen sometime in the first half of 2006."

Wednesday brings reads on the October trade balance, import and export prices and weekly crude oil inventories.

Fed officials meeting Tuesday decided to boost the Fed funds rate, an overnight bank lending rate, by a quarter-percentage point to 4.25 percent, as expected, at the conclusion of their policy-setting meeting at around 2:15 p.m. ET. It was the 13th consecutive increase since the central bank began its rate-hiking campaign in June 2004.

In the closely-watched statement, the central bank dropped a long-standing reference to policy accommodation, but stated that "some further measured policy firming is likely to be needed," a change that market participants took as hinting that the 18-month rate hiking campaign could be nearing an end.

"By losing 'accommodative,' it indicates that broadly speaking, policy is partly neutral, but at the same time, we think that we still have more tightening to do," said Joshua Shapiro, chief economist at money manager Maria Fiorina Ramirez Inc.

The statement also noted that the economy has thrived despite the challenges of higher energy prices and the fall hurricanes, and noted that they will be attuned to the labor market and the overall economy for pressure to core inflation.

The Fed also stated that they will be watching "resource utilization,"or the amount of slack in the labor markets and manufacturing sector, for signs of inflation, an interesting change from the last Fed statement, Sheldon noted.

A variety of stocks jumped following the announcement, including materials, biotech, chips, financials and homebuilders.

Among the gainers, Dow component Pfizer (up $1.37 to $22.31, Research) jumped 6.5 percent after saying late Monday that it was boosting its cash dividend by 26 percent for the first quarter of 2006.

Fellow Dow stock Procter & Gamble (up $1.60 to $58.51, Research) gained 2.8 percent after it boosted its second-quarter earnings and revenue growth estimates.

McDonald's (up $0.80 to $35.27, Research), Home Depot (up $0.95 to $42.27, Research) and Philip Morris (up $1.52 to $74.03, Research) all gained at least 2 percent, supporting the Dow industrials.

Homebuilders jumped, with the Dow Jones Home Construction (up $14.95 to $936.71, Research) index up 1.6 percent.

Financials shares rose too, lifting the Philadelphia Bank Sector (up 1.37 to 105.01, Charts) index by 1.3 percent.

On the downside, Hewlett-Packard (down $0.90 to $29.07, Research) lost 3 percent after its fiscal 2006 revenue forecast disappointed some investors. The computer and printer maker forecast a revenue range of $89.5 billion to $91.0 billion, which sets the midpoint below analysts' forecasts.

Fellow Dow tech components IBM (down $2.25 to $83.71, Research) and Microsoft (down $0.32 to $27.13, Research) declined as well.

General Motors (down $0.75 to $22.30, Research) slumped 3 percent after ratings agency Standard & Poor's downgraded its bonds deeper into junk status Monday and cautioned that bankruptcy was not off the table for the troubled automaker, even after its recent restructuring.

Lehman Brothers (up $0.33 to $128.50, Research) reported fiscal fourth-quarter earnings and revenue that rose from a year earlier and topped forecasts. The stock had slumped all day, but turned higher along with the broader financial sector after the Fed news.

Best Buy (down $5.90 to $43.94, Research) reported third-quarter earnings and revenue that fell from a year earlier. Earnings missed analysts' targets, while revenue was in line with forecasts. The electronics chain also forecast fourth-quarter earnings in a range that would either miss or meet forecasts. Shares slipped 11 percent.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers by six to five on volume of nearly 1.78 billion shares. On the Nasdaq, decliners narrowly edged winners on volume of 1.92 billion shares.

November retail sales rose 0.3 percent, the government said Tuesday, short of forecasts for a rise of 0.4 percent. Sales excluding autos fell 0.3 percent, versus forecasts for an unchanged reading.

U.S. light crude oil for January delivery rose 7 cents to settle at $61.37 a barrel on the New York Mercantile Exchange.

The dollar gained versus the euro and yen.

COMEX gold for February delivery fell $7.40 to settle at $524.10 an ounce.