Federal Reserve decision causes Dow jump

by: Dan Tordjman Updated:


Within hours of the Federal Reserve's announcement that it would start buying bonds, the Dow jumped to a  five-year high.

The Dow closed up more than 200 points to finish at 13,539 and the NASDAQ picked up more than 41 points to close at 3,155.

The markets reacted favorably, with stocks rising right after the announcement.

The federal investment will keep interest rates at historic lows at least until 2015.

The government hopes it will encourage increased spending; specifically in the housing market.

The goal is for the investment to lead to more business and ultimately a growing job force.

"We think it does have impact on the economy. We think it does have impact on the labor market, but again, the way I would describe it is a significant effect, a meaningful effect, but not a panacea, not a solution for the whole issue," said Federal Reserve Chairman Ben Bernanke.