Federal Reserve

Stocks rally as Fed begins $10 billion taper; Treasurys shrug off news

A trader uses his mobile phone as he works on the floor of the New York Stock Exchange on Wednesday.

The Federal Reserve announced Wednesday it would start to taper its aggressive bond-buying program to $75 billion a month.

The FOMC also announced it would lower its monthly long-term Treasury bond purchases to $40 billion and mortgage-backed securities to $35 billion a month, both reductions of $5 billion.

U.S. stocks surged on the Fed's announcement, with the Dow making a triple-digit climb.

(Read more: US stocks rally on Fed taper decision)

"I think it logically, this is what they had to do," said David Kelly, managing director at JPMorgan Funds. "If you look at what's happened this year, the unemployment rate has come down to 7 percent. We've got housing starts over a million units. We got the S&P 500 up 25 percent. In this economy, you have to pull back from the most extreme monetary policy in a century. So I think it's overdue. I'm glad to see it."

(Check out the live blog of the Fed's last press conference of 2013 here.)

Nine of the voting members of the FOMC supported the decision to start tapering. Meanwhile, Boston Fed President Eric Rosengren dissented.

Markets had first expected tapering to begin in September, and then began to shift their focus to December—or even later.

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