Dow Jones, S&P 500 close at all-time highs on Fed news

NEW YORK CITY - Agence France-Presse

Federal Reserve Chairman Ben Bernanke, speaking at a news conference, is seen on a television screen on the floor of the New York Stock Exchange on Sept. 18. AFP photo

U.S. stocks soared Sept. 18 to all-time closing highs after the Federal Reserve left its huge monetary stimulus in place.

The Dow Jones Industrial Average jumped 147.21 (0.95 percent) to 15,676.94, 18 points above the previous record set on August 2. The broad-based S&P 500 surged 20.76 (1.22 percent) to 1,725.52, besting the previous high, also hit on August 2, by nearly 16 points.

The tech-rich Nasdaq Composite Index rose 37.94 (1.01 percent) to 3,783.64. All three indices had been trading down before spiking upward after the Fed's 1800 GMT policy statement.

The Fed surprised markets by deciding against dialing back its $85 billion per-month bond-buying program. Many market-watchers had expected the Fed to trim the program by $10-$15 billion per month.

Instead, the Fed cut its economic growth forecast for this year and next and expressed concern that the recent sharp rise in interest rates has already slowed the economy. "The committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall," it said at the end of a two-day monetary policy meeting.

"But the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market." Besides vaulting stocks higher, the Fed news sent the dollar lower against other major currencies and pushed US Treasury bond yields lower.

"The market is celebrating the fact that the Fed is sticking to data dependency and that real yields are coming down," said Art Hogan, head of product strategy at Lazard Capital Markets.