(MENAFN- AFP) US stocks rallied strongly Wednesday after initially tumbling following a decision by the US Federal Reserve to scale back its bond-buying program.
At 1925 GMT, 25 minutes after the Fed's announcement, the Dow Jones Industrial Average rose 165.30 (1.04 percent) to 16,040.56. The S&P 500 added 13.10 (0.74 percent) at 1,794.10, while the tech-rich Nasdaq Composite Index added 9.53 (0.24 percent) to 4,033.21.
All three indices recovered after initially plunging on the announcement. The gains suggested investors were cheered by the Fed's belief the economy has strengthened enough to scale back the bond purchases.
Analysts had been split on whether the Fed would scale back its $85 billion a month bond-buying program. Easy liquidity has been a major factor in the stock market surge of 2013.
The Fed decided to "modestly reduce the pace of its asset purchases" based on "the improvement in economic activity," it said in a statement. The central bank said future decisions on asset purchases "are not on a preset course" and will depend on economic data.
Other key markets also stabilized after dramatic moves in the moments just after the Fed announcement. Near 1920 GMT, the yield on the 10-year US Treasury was 2.90 percent, only a hair above the level an hour before the Fed announcement.
The dollar was stronger against the Japanese yen, but weaker against the euro and the pound compared with Tuesday. However, the dollar did not move significantly after the Fed announcement compared with the period just before.
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