Stocks rose after an initial rocky response to the Federal Reserve announcement it would buy $600 billion in long-term Treasurys by the end of the second quarter of 2011 in an effort to stimulate the economy's sluggish growth.
The Dow Jones Industrial Average advanced a few points, after bouncing between positive and negative territory following the news.
Hewlett-Packard and Cisco advanced, while Microsoft and American Express fell.
The S&P 500 Index and the Nasdaq both rose. The CBOE Volatility Index, widely considered the best gauge of fear in the market, sank nearly 8 percent to below 20.
Among key S&P 500 sectors, financials, telecom and tech rose.
In the Fed announcement, the central bank said it would buy $75 billion in longer-term Treasury bonds a month, and said it would "regularly review the pace and size of the program and adjust it as needed depending on the path of the recovery." (Click here for a copy of the statement.)
The amount of the Fed's stimulus effort was a little more than the $500 billion expected by the market, although many observers had expected the pace of the purchases to be closer to $100 billion a month.
The end result, however, was largely priced into the market, which explains why stocks fell after the news, said Dan Cook, CEO of IG Markets.
"I don't see this will do very much for our economy," Cook said.
By choosing to buy long-term Treasurys, the Fed is making a bet that lower long-term rates will drive economic activity. But, Cook said, lower rates will cause the economy to ignite only if there already is movement. But in an environment like we have today, with sluggish job growth and slack demand, not much is going to happen, he said.
"They could knock $100 off the price of a Lamborghini, but it would still be out of the range of most people," Cook said.
Before the Fed news, a Republican takeover of the House of Representatives, and a largely positive batch of economic data, did not create much enthusiasm in the market.
Also, President Obama addressed reporters at the White House in his first public appearance since the Republican Party snatched 60 U.S. House seats.
"We must find common ground in order...to make progress," the president said. "We want to engage both Democrats and Republicans in serious conversations about where we're going as a nation."
Investors now need to move on from the major events this week, some market pros said.
“We’re trying to get investors refocused in their portfolio post-election, post-Fed, and focus on areas where we can make some money and look for repositioning into year-end,” Lawrence Glazer, managing director at Mayflower Advisors said on CNBC.
Glazer said stocks are likely to see a "January bounce"and expects areas such as financials and homebuilders, which were less pronounced this year, to see a boost.
In corporate news, sales from the major auto makers were released Wednesday. Ford shares advanced, hitting a 52-week high, after the automaker reported October sales rose 23.2 percent, more than expected. A sales analyst at Ford said October auto sales are projected to hit a pace of 12 million vehicles, which would be a new monthly high for 2010.
Rivals GM and Chrysler also reported results that beat forecasts.
Toyota's results disappointed, however, as sales fell 0.9 percent in October from a year earlier, while Honda's sales climbed 16 percent.
On the tech front, Cisco shares rose more than 1 percent after news the computer network company created software to help companies find and respond to potential customers through social networking sites like Twitter and Facebook.
Google shares climbed after the top Web search provider said it will allocate about $8.5 million to Internet privacy and policy organizations as part of a class action settlement involving its Buzz social hub.
Meanwhile, Motorola fell after news Carl Icahn bought another 15.2 million shares of the wireless phone provider.
BlackRock shares tumbled almost 5 percent after Bank of America said it plans to sell more than half its stakein the global investment management firm. In addition, fellow part-owner PNC Financial Services is selling up to 7.5 million shares. Meanwhile, Goldman Sachs cut its price target on BofA to $16 from $19.
Goldman Sachs also lowered its price target on Wells Fargo to $33 from $37.
Hartford Financial Services jumped after the insurance company swung to a profit on Tuesday, as the major restructuring plan it unveiled in April started to show up in the company's results.