NEW YORK (AP) -- See, it wasn't so bad.
Investors sent stocks soaring Wednesday afternoon when the Federal Reserve surprised the market by deciding to dial back its extraordinary economic stimulus. The central bank cited a stronger jobs market.
Investors have been anxious for months about whether the economy was strong enough to grow without the Fed.
The stock market's afternoon surge answered the question.
The Dow Jones industrial average jumped 217 points, or 1.4 percent, to 16,090 as of 2:39 p.m. Eastern. Shortly before the Fed announcement at 2 p.m. Eastern, it was up just 47 points.
The Standard & Poor's 500 index was up 17 points, or 1 percent, to 1,798 and the Nasdaq composite rose 18 points, or 0.5 percent, to 4,041.
"Investors should see this as a vote of confidence for the economy," said Kristina Hooper, head of U.S. investment strategies for Allianz Global Investors
Starting in January, the Fed will reduce its bond-buying program to $75 billion a month from $85 billion now.
The program, which has been in place in various forms since the financial crisis, is designed to keep down interest rates low and stimulate the economy.
The Fed also said it is likely to keep cutting its bond purchase in future meetings.
The decision was a surprise to the market, as most strategists and economists expected the Fed to wait until March before pulling back.
Markets are also reacting to good news on the housing front. Builders broke ground on homes at the fastest pace in more than five years and 23 percent more than in October, the Commerce Department says. Permits for single-family homes rose, indicating that builders are increasingly confident in the market.
The homebuilder Lennar surprised Wall Street by reporting a 32 percent profit increase. The stock climbed 76 cents, or 2 percent, to $35.96.
In other news:
Micron Technology fell $1.83, or 8 percent, to $21.09 on concerns that the company could face increased competition from overseas. Micron dragged other technology stocks lower, particularly memory storage companies Western Digital, Seagate Technology and SanDisk.
Ford slumped $1.18, or 7 percent, to $15.52 after the company issued a three-year profit forecast that came in short of investors' expectations. The company cited a large number of vehicle launches in 2014 as well as weakness in overseas markets. General Motors slipped $1.56, or 4 percent, to $39.97.