The Fed's actions, plus reassuring first-quarter reports from the two investment banks, sent the Dow over 400 points, or 3.51, to 12392.66, its biggest one-day point gain in more than five years.
Financials rallied across the region. Citigroup's Japan listing closed a whopping 10 percent higher. Japan's Sumitomo Mitsui Financial, South Korea's Shinhan Financial and Australia's Macquarie Group were all finished with large gains.
Japan's Nikkei 225 Average rose 2.4 percent but pared some of their earlier gains, with worries about the global financial system preventing a further rise while exporters such as Toyota Motor received a boost from a somewhat weaker yen. Gains were also limited in the Japanese market ahead of a national holiday on Thursday, market players said.
South Korea's KOSPI closed 2.1 percent up, with foreign investors making their biggest purchases since October. Foreigners bought a net 532.34 billion won ($528.6 million) worth of Seoul shares on Wednesday, the biggest net amount since October 11, 2007. Electronics titles led the way, with Samsung Electronics rising 4 percent and LG Electronics up 3 percent.
Australian shares finished up 4 percent, led by financial firms. Analysts said while the news was a big positive for investors shaken by the fall of Bear Stearns, markets remain vulnerable to further bad news. Australia and New Zealand Banking Group and Westpac Banking both ended with strong gains. Resource firms also climbed after base metal prices rose in London. BHP Billiton and Rio Tinto closed higher.
Hong Kong stocks rose more than 2 percent as the Fed's hefty rate cut sparked widespread buying and HSBC Holdings tracked a global rally in banking stocks. China Merchants Bank, China's sixth-largest lender, surged after posting forecast-beating earnings.
Singapore's Straits Times Index closed flat after trading higher most of the day, with investors seeking to take profit.
China's Shanghai Composite Index closed nearly 3 percent higher, led by large-caps, amid rumors that the government would take steps to boost the market, perhaps by cutting the stock stamp duty. Fund managers and senior brokerage analysts said they could not confirm the rumors. An official at the China Securities Regulatory Commission declined to comment. Recent loser Industrial and Commercial Bank of China was on the advance.