* Federal Reserve leaves interest rates unchanged
* Dow up 0.16 pct, S&P 500 up 0.06 pct, Nasdaq up 0.41 pct (Updates after Federal Reserve announcement, changes byline, adds NEW YORK to dateline)
By April Joyner
NEW YORK, May 2 (Reuters) - U.S. stocks edged higher on Wednesday after the Federal Reserve released its policy announcement, leaving interest rates unchanged.
In its announcement, the U.S. central bank expressed a confident economic outlook, saying that activity had expanded at a moderate rate and that inflation was nearing its 2-percent target. The Fed unanimously decided to keep its lending rate in a target range of between 1.50 percent and 1.75 percent. It is expected to increase rates in June.
The Fed's announcement assuaged investors' concerns about the possibility of accelerated interest-rate increases as rising materials costs for companies have signaled a pickup in inflation.
"I'd call what the market is doing a sigh of relief because we didn't get an unexpected hike," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
The Dow Jones Industrial Average rose 38.48 points, or 0.16 percent, to 24,137.53, the S&P 500 gained 1.63 points, or 0.06 percent, to 2,656.43 and the Nasdaq Composite added 29.18 points, or 0.41 percent, to 7,159.88.
Advancing issues outnumbered declining ones on the NYSE by a 1.61-to-1 ratio; on Nasdaq, a 2.11-to-1 ratio favored advancers.
The S&P 500 posted 13 new 52-week highs and 19 new lows; the Nasdaq Composite recorded 74 new highs and 40 new lows. (Additional reporting by Sruthi Shankar in Bengaluru and Sinéad Carew in New York; Editing by Shounak Dasgupta and Chizu Nomiyama)