The Dow increased by almost 430 points, or 3.98 percent. The S&P 500 Index shot up 53.07 points, or 4.74 percent, while the Nasdaq Composite Index gained 124.83 points, or 5.3 percent.
The Federal Open Markets Committee (FOMC) of the Federal Reserve stated Aug. 9, that “a somewhat slower pace of recovery over the coming quarters” is expected, after the recent downgrade in long-term U.S. debt and continued weakness in the eurozone’s economy.
Investors globally were hoping for any form of good news to stem the recent losses, and stocks initially declined after the FOMC statement. But in the last hour or so of trading, investors bid up share prices as the Dow rallied by more than 624 points in the late afternoon.
The Fed announced Tuesday afternoon that it would keep short-term interest rates at near zero, or record low levels, for up to two more years. The Fed hopes the move would ease investor concern and increase business activity.
The decision boosted markets Tuesday, as the Dow climbed back above 11,000 points to 11,239.77 at market close. The near 430-point gain is the biggest one-day increase this year.
Globally, shares were mixed in other markets. The Nikkei 225 Index in Tokyo shed 1.5 percent, and the Hang Seng in Hong Kong lost 3 percent. The FTSE 100 Index, the major index in London, gained 1.9 percent.
