US stocks closed higher as Fed postponed stimulus tapering

The Standard & Poor’s 500 Index climbed to a record after the Federal Reserve unexpectedly refrained from reducing bond buying, rewarding bulls who have enjoyed a 155% rally since stimulus began five years ago.

The S&P 500 jumped 1.2% to 1,725.52 at 4 p.m. in New York, erasing an earlier decline of as much as 0.3%. The benchmark index climbed above its all-time high of 1,709.67 reached Aug. 2. The Dow Jones Industrial Average rose 147.21 points, or 1%, to 15,676.94, also a record. Gold rallied while the dollar slid. About 7.4 billion shares changed hands on U.S. exchanges, the most since June 28.

“Everyone was a little stupefied,” Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank, which oversees $170 billion, said by phone for Bloomberg. “It’s great to own stocks when we’re at these great levels. When money’s going to continue to be free for a while, it all plays into the valuations.”

Chairman Ben S. Bernanke and his policy making colleagues refrained from paring record stimulus as rising borrowing costs show signs of slowing the four-year expansion. Treasury yields have jumped since May, when Bernanke first outlined a possible timetable for a reduction in the asset purchases.

Corporate news were focused around FedEx who rallied 5% to $116.25, the highest level since 2007. The company, regarded as an economic leader because of the variety of goods it ships globally, began taking steps last year to reduce costs by $1.7 billion as customers opt for cheaper shipping. FedEx is parking older planes sooner, trimming capacity to Asia and eliminating 3,600 jobs through buyouts.

Adobe Systems Inc. rallied 9.2% to $52.58. The largest maker of graphic-design tools said the number of Web subscribers jumped 47% in the fiscal third quarter, even as sales and profit declined.

Raw-materials stocks gained 2.3%. Newmont Mining, the largest U.S. gold producer, surged 8.2% to $30.87 and Barrick Gold jumped 9.7% to $20.11. Gold rallied the most since 2009, erasing an earlier decline after the Fed decision as the metal’s attractiveness as a store of value increased.