Stocks soared in late trading Tuesday, with the Dow Jones industrial average returning above the 11,000 mark, as the Federal Reserve said it was prepared to use a range of tools to bolster the economy after Monday's rout in equities.
The Dow closed up 429.92, or 3.98%, at 11,239.77; the S&P 500 rose 53.07, or 4.74%, closing at 1,172.53; and the Nasdaq composite was up 124.83, or 5.29%, to close at 2,482.52. All numbers are preliminary.
The S&P 500 gained as much as 2.9% in midday trading, then dropped 1.6% following the Fed's statement before resuming its advance.
The Fed pledged for the first time to keep its benchmark interest rate at a record low at least through mid-2013 in a bid to revive the flagging recovery after a worldwide stock rout. The Federal Open Market Committee discussed a range of policy tools to bolster the economy and said it is “prepared to employ these tools as appropriate,” it said in a statement Tuesday.
Stocks rose one day after benchmark indexes had their biggest slump since December 2008 amid concern that a reduction of the U.S. credit rating by S&P may worsen an economic slowdown. The S&P 500 slumped 11% in three days, the most since November 2008, and fell to the lowest since September. The index dropped 18% from this year's high on April 29 through Monday.