By KEN SWEET
AP Markets Writer
NEW YORK - Investors plowed money into stocks and bonds today after the Federal Reserve's surprise decision to keep its economic stimulus in place.
The news sent the Standard & Poor's 500 index and Dow Jones industrial average to a record highs. Bond yields fell sharply, and gold jumped as traders anticipated that the Fed's decision could cause inflation.
In a statement, Fed policymakers voted to maintain the central bank's $85 billion-a-month bond-buying program, which has been in place in one form or another since late 2008. The bank said, in a statement, that while the U.S. economy was improving, policymakers "decided to await more evidence that progress will be sustained" before deciding to cut back.
Thirty minutes after the Fed announced its decision, the S&P 500 was up 18 points, or 1 percent, to 1,723, slicing through its previous all-time high of 1,709.67 set on Aug. 2.
The Dow was up 127 points, or 0.8 percent, to 15,656. It was down 44 points just before the Fed said it wouldn't scale back its bond-buying program yet.
The yield on the 10-year Treasury fell sharply as investors bought U.S. government bonds. The yield fell to 2.75 percent from 2.87 percent a minute before the Fed released its statement.
The fate of the Fed's economic stimulus program has been the biggest question on Wall Street for months.
Fed Chairman Ben Bernanke laid out a plan in June to start easing up on the bond-purchase program, and pledged to end it by the middle of 2014, if the economy continued to improve.
It was widely expected that the Fed would cut back on its bond buying at its September meeting.
Tom di Galoma of ED&F Man Capital said he was "completely shocked" that the Fed decided to wait.