Both the S&P 500 Index and the Dow Jones Industrial Average hit new record highs today after Fed Chairman Ben Bernanke announced that they would not begin tapering the $85 billion monthly bond buying program. This announcement came as a huge shock to the markets because most investors were expecting the tapering to begin any day now.

stocks

New record highs today

The S&P 500 climbed more than 1 percent to $1,728.55 during the regular trading day. The previous all-time high was $1,709.67, which was set on Aug. 2. The Dow Jones Industrial Average climbed 1 percent to $15,705.93.

Nick Taborek and Lu Wang of Bloomberg report that the biggest gains among U.S. stocks were in utilities, financial companies and commodity shares. They climbed over 1.5 percent with Bank of America Corp (NYSE:BAC) and General Electric Company (NYSE:GM) leading the way. Adobe Systems Incorporated (NASDAQ:ADBE) also saw a healthy rally on Wednesday after the company surpassed 1 million subscribers for its Creative Cloud service.

Bloomberg data indicates that the volume of U.S. stocks surged right after the Fed’s announcement, with approximately 552 million shares changing hands on all exchanges in just the 10 minutes after 2 p.m. Eastern. That’s compared with 113 million shares in the 10 minutes right before that.

Gold also soared upward climbing sharply after the Fed’s announcement.

No tapering right now

Both the S&P and Dow Jones have the Fed’s decision to thank (at least partially) for their new highs. Stocks surged in the wake of the announcement that tapering won’t begin yet. The Federal Reserve chairman also said today that they are not satisfied with the pace of economic growth within the U.S. right now. The central bank believes this isn’t the right time to begin tapering off the quantitative easing program.

The Fed will now wait for additional evidence that progress in growing the U.S. economy will be sustained. It also downgraded its economic outlook, saying that gross domestic product growth will be between 2 percent and 2.3 percent. Previously the Fed had been predicting that GDP growth would be between 2.3 percent and 2.6 percent. Officials also cut their forecast for next year to between 2.9 percent and 3.1 percent. Their previous forecast had been between 3 percent and 3.5 percent.