* Fed says economy and job market continue to strengthen
* Twitter dives after poor quarterly report
* General Dynamics' report sparks rally in aerospace stocks
* Indexes up: Dow 0.71 pct, S&P 0.71 pct, Nasdaq 0.42 pct (Updates with reaction to Fed statement)
By Noel Randewich
July 29 (Reuters) - U.S. stocks were higher on Wednesday after the U.S. Federal Reserve left its key interest rate unchanged and said the economy and job market continued to strengthen.
The central bank's comments on the economy and inflation after its two-day pow-wow appeared to do little to drastically change wide expectations that the first rate hike will come in September or possibly December.
No move on rates was expected this week. U.S. interest rates have remained near zero for almost a decade and the Fed has said it will raise rates once it sees a sustained recovery in the economy.
"No change as expected, markets appear comfortable with that, it certainly is not a surprise," Peter Kenny, chief market strategist at Clearpool Group in New York, said after the Fed's statement was released.
At 2:49 p.m., the Dow Jones industrial average was up 0.71 percent at 17,755.09. The S&P 500 gained 0.71 percent to 2,108.03 and the Nasdaq Composite added or 0.42 percent to 5,110.82.
All 10 major S&P sectors were higher with the telecommunications index's 1.43 percent rise leading the way.
With second-quarter reports well under way, analysts now expect overall earnings of S&P 500 companies to edge up 0.8 percent and revenue to decline 3.9 percent, according to Thomson Reuters data.
While earnings are expected to increase this quarter, valuations remain a concern. The S&P 500 is trading near 16.9 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.
Companies scheduled to report after the bell include Facebook MetLife and Whole Foods Market.
Twitter shares fell as much as 14.3 percent to a year-low of $31.30 after the microblogging company said its number of monthly average users rose at the slowest pace since it went public in 2013.
General Dynamics rose as much as 6.3 percent to hit a record high after its earnings. It sparked a sector-wide rally across major aerospace stocks including Northrop Grumman , Spirit Aerosystems, Lockheed Martin and Transdigm Group.
Advancing issues outnumbered declining ones on the NYSE by 2.90 to 1. On the Nasdaq, the ratio was 1.50 to 1.
The S&P 500 was posting 26 new 52-week highs and 1 low; the Nasdaq was recording 43 new highs and 62 lows. (Editing by Don Sebastian and Nick Zieminski)