Stocks rose to new record highs on Wednesday after the Federal Reserve announced it will start slowing the pace of its monthly bond purchases, a decision that was widely anticipated by market participants and signaled the strengthening U.S. economy.

Here's how the market settled on Wednesday:

S&P 500 Index (SPY  ): +0.65% or +29.91 points to 4,660.56

Dow Jones Industrial Average (DIA  ): +0.29% or +104.95 points to 36,157.58

Nasdaq Composite Index (QQQ  ): +1.04% or +161.98 points to 15,811.58

Fed to start tapering its pandemic-era bond purchases:

The Fed announced Wednesday it will soon begin tapering the pace of its monthly bond purchases as the U.S. economy continues to recover from the financial impact the coronavirus pandemic brought.

The Federal Open Market Committee said in its post-meeting statement that tapering of bond purchases will begin later this month, with the process seeing reductions of $15 billion each month--$10 billion in U.S. Treasurys and $5 billion in mortgage-backed securities--from the central bank's current pace of $120 billion per month.

In its statement, which was approved unanimously by policymakers, stressed that the Fed's tapering will by fluid, meaning it is not an a pre-set schedule and the central bank will make adjustments to the process as needed.

"The Committee judges that similar reduction in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook," FOMC said in a statement.

Despite the bond tapering, the Fed maintains that it will keep interest rates low for the foreseeable future.

"Our decision today to begin tapering our asset purchases does not imply any direct signal regarding our interest rate policy. We continue to articulate a different and more stringent test for the economic conditions that would need to be met before raising the federal funds rate," Fed Chair Jerome Powell said in his post-meeting news conference Wednesday afternoon.

Private payrolls added more jobs than expected in October:

The U.S. private sector added more jobs than expected in October as a surge in service-focused company hiring worked to meet elevated demand.

Private payrolls increased by 571,000 for the month, according to ADP's report published Wednesday, beating the 400,000 rise expected by consensus economists polled by Bloomberg and above September's downwardly revised total of 523,000. This was the payroll processing firm's best monthly jobs report since June.

Leisure and hospitality, which includes bars, restaurants and hotels, saw a gain of 185,000 for the sector, which is still well below its pre-pandemic employment levels. Growth in this sector helped drive an overall 458,000 gain in services jobs.

Here's how market benchmarks started trading soon after opening bell:

S&P 500 Index: -0.06% or -2.85 points to 4,627.80

Dow Jones Industrial Average: -0.11% or -37.96 points to 36,014.67

Nasdaq Composite Index: -0.19% or -29.57 points to 15,620.03