* Fed holds steady, eyes two rate hikes this year
* Materials best performing sector
* Indexes up: Dow 0.57 pct, S&P 0.63 pct, Nasdaq 0.77 pct (Updates with further market reaction to Fed statement)
By Laila Kearney
NEW YORK, March 16 (Reuters) - Wall Street gained on Wednesday after the U.S. Federal Reserve left interest rates unchanged and signaled fewer rate hikes for the year.
The Fed indicated moderate U.S. economic growth and “strong job gains” would allow it to tighten policy this year with fresh projections showing policymakers expected two quarter-point hikes by the year’s end, half the number seen in December.
But the U.S. central bank noted the United States continues to face risks from an uncertain global economy.
Because of that uncertainty, “the committee judged it prudent to maintain the current policy stance at this meeting,” Fed Chair Janet Yellen said.
The decision to keep rates steady was in line with analyst predictions.
“The market has been pricing two hikes at the most and their adjustment of the end of year forecast is consistent with two hikes,” said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin. “So yes, the market is basically saying, ‘We had it right.'”
The Dow Jones industrial average was up 97.52 points, or 0.57 percent, to 17,349.05, the S&P 500 gained 12.69 points, or 0.63 percent, to 2,028.62 and the Nasdaq Composite added 36.51 points, or 0.77 percent, to 4,765.18.
Eight of the 10 major S&P sectors were higher. Materials were up the most at 1.67 percent. Healthcare and financial stocks lagged.
The S&P energy sector was up 1.29 percent as crude rose nearly 4 percent after major producers agreed to meet next month to discuss freezing output.
In U.S. corporate news, shares of Oracle were up 4.5 percent at $40.47 after the enterprise software company’s quarterly profit beat estimates.
LinkedIn was down 4.7 percent at $110.11 and Gap fell 1.7 percent to $29.21 after Morgan Stanley downgraded both stocks.
Fossil was down 4.7 percent at $44.67 after Macquarie cut its rating on the stock to “underperform.”
Mallinckrodt was down 9.3 percent at $53.98, continuing its slide for a second day, while fellow specialty drugmaker Endo International recouped some of its losses from Tuesday, rising 4.7 percent to $34.10.
Advancing issues outnumbered decliners on the NYSE by 2,393 to 619, for a 3.87-to-1 ratio on the upside; on the Nasdaq, 1,679 issues rose and 1,079 fell for a 1.56-to-1 ratio favoring advancers.
The S&P 500 posted 34 new 52-week highs and 5 new lows; the Nasdaq recorded 33 new highs and 62 new lows. (Additional reporting by Lewis Krauskopf in New York, additional reporting by Gertrude Chavez-Dreyfuss and Saqib Iqbal Ahmed; Editing by Don Sebastian and Nick Zieminski)