Stocks, bonds rise sharply as Fed keeps stimulus

NEW YORK (AP) — The stock market hit a record high today after the Federal Reserve's surprise decision to keep its economic stimulus in place.

Bond yields fell sharply and the price of gold jumped as traders anticipated that the Fed's decision might cause inflation.

In a statement, Fed policymakers voted to maintain the central bank's $85 billion-a-month bond-buying program, which has been in place in one form or another since late 2008. The bank said that while the U.S. economy was improving, policymakers "decided to await more evidence that progress will be sustained" before deciding to cut back.

The market had been in a holding pattern before the Fed released its policy statement at 2 p.m. Eastern time. Moments before the decision was announced, the Standard & Poor's 500 was little changed from the day before.

The Fed's decision, which was announced at the end of a two-day policy meeting, shook the market out of its lull. The S&P 500 was up 17 points, or 1 percent, to 1,722 in afternoon trading, having sliced through its previous all-time high of 1,709.67 set on Aug. 2.