NEW YORK (AP) — The stock market hit a record high Wednesday after the Federal Reserve's surprise decision to keep its economic stimulus in place.

Bond yields fell sharply and the price of gold jumped as traders anticipated that the Fed's decision might 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 that while the U.S. economy was improving, policymakers "decided to await more evidence that progress will be sustained" before deciding to cut back.

The market had been in a holding pattern before the Fed released its policy statement at 2 p.m.

Eastern time. Moments before the decision was announced, the Standard & Poor's 500 was little changed from the day before.

The Fed's decision, which was announced at the end of a two-day policy meeting, shook the market out of its lull. The S&P 500 was up 17 points, or 1 percent, to 1,722 in afternoon trading, having sliced through its previous all-time high of 1,709.67 set on Aug. 2.

The Dow Jones industrial average was up 131 points, or 0.9 percent, to 15,664, above its previous record high of 15,658, also set Aug. 2.

The fate of the Fed's economic stimulus program has been the biggest question on Wall Street for months. It was widely expected that the Fed would cut back on its bond buying at its September meeting.

Tom di Galoma, a bond trader at ED&F Man Capital, said he was "completely shocked" that the Fed decided to wait.

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.

Bond prices also rose sharply, sending yields lower. The yield on the 10-year Treasury note fell to 2.73 percent from 2.87 percent a minute before the Fed released its statement. That yield is a benchmark for many kinds of lending rates, including home mortgages.

The price of gold jumped $34, or 2.7 percent, to $1,344 an ounce.