In New York, the Dow Jones Industrial Average vaulted 3.55 percent to close at 12,156.81 in the biggest gain for the blue-chip index since July 2002.
The Nasdaq composite powered higher by 3.98 percent to 2,255.76 and the broad-market Standard & Poor's 500 index rallied 3.71 percent to 1,320.65.
"Most of the glee in the equities market can be attributed to the Federal Reserve's decision to loan billions of dollars in securities in an attempt to lift liquidity in the financial arena," said Andrea Kramer at Schaeffer's Investment Research.
European markets also rallied with the Fed announcement coming ahead of their close.
In London, the FTSE 100 index rose 1.09 percent at 5,690.40. In Paris the CAC 40 added 1.33 percent to 4,627.69 while in Frankfurt the Dax was up 1.19 percent