Stock market sets record

Associated Press

NEW YORK

The stock market hit a record high Wednesday as investors cheered the Federal Reserve’s surprise decision to keep its economic- stimulus program in place.

Stocks traded slightly lower throughout the morning but took off immediately after the Fed’s decision in the early afternoon. Bond yields fell sharply — their biggest move in nearly two years. The price of gold had its biggest one-day jump in four years as traders anticipated that the Fed’s decision might cause inflation.

Fed policymakers decided to maintain the central bank’s $85 billion in monthly bond purchases, a program that has been in place since December 2012. The bond purchases encouraged borrowing by keeping interest rates low and encouraging investors to buy stocks by making bonds more expensive in comparison.

Though the U.S. economy appeared to be improving, the bank’s policymakers “decided to await more evidence that progress will be sustained” before deciding to slow the bond purchases. The bank also cut its full-year economic outlook for this year and next.

Stock traders shrugged off the Fed’s dimmer outlook and focused on the prospect of continued stimulus.

The S&P 500 surged 20.76 points, or 1.2 percent, to 1,725.52, slicing through its previous all-time high of 1,709.67 set on Aug. 2.

The Dow Jones industrial average jumped 147.21 points, or 1 percent, to 15,676.94, also above its previous record high of 15,658.36 from Aug. 2.

The Nasdaq composite rose 37.94 points, 1 percent, to 3,783.64.