Updated from 4:12 p.m. EDTWith a kick from the Fed, stocks in New York turned a down day around to lock in 1% to 2% gains after the government said it would expand its quantitative easing efforts. Bank of America ( BAC)and Citigroup ( C) each surged more than 22%, leading the Dow Jones Industrial Average, which rose 90.88 points, or 1.2%, to 7486.58, while the S&P 500 added 16.23 points, or 2.1%, to 794.35. The Nasdaq was better by 29.11 points, or 2%, to 1419.22, as it celebrated the prospective buyout of Sun Microsystems ( JAVA). The Federal Open Market Committee wrapped up its meeting on Tuesday afternoon, saying it would keep its key interest rate at record low rates, not surprisingly. Of note, the FOMC said it would purchase up to $750 billion of agency mortgage-backed securities, bringing its total purchases up to $1.25 trillion this year. The Fed will also purchase up to $300 billion of longer-term Treasury securities over the next six months to help conditions in private credit markets, and said it could expand the Term Asset Backed Securities Loan Facility (TALF) to include other financial assets. "These are the right steps because it continues to show the fed is moving aggressively to stabilize these credit markets, and that commitment alone is going to have a positive effect overall on stabilizing the markets and getting the conditions for credit flows," says Brian Bethune, chief U.S. financial economist at IHS Global Insight. Also, as a complement to their other balance-sheet programs, buying longer-term Treasuries makes a lot of sense, says Bethune. "The longer-term Treasury market has been extremely volatile, in terms of pricing and yield, and stabilizing conditions there will have a stabilizing effect on the entire spectrum of borrowing costs -- a lot of banks mark to the long-term treasuries."