US markets close at multi-year high on QE3

The US markets finished at multi-year highs as Wall Street cheered the Federal Reserve's plan to launch another round of quantitative easing to prop up the sluggish economy. The CBOE VIX  tumbled 11% to finish near 14.

Dow Jones Industrial Average rose 1.55% or 206.51 points at 13539.86. Nasdaq Composite gained 1.33% or 41.52 points at 3155.83. Standard & Poor's 500 added 1.63% or 23.43 points at 1459.99.

The Fed launched another aggressive stimulus program, saying it will buy 40 billion dollars of mortgage debt each month and continue to purchase assets to improve the jobs market.

Meanwhile, the Fed lowered its growth outlook for 2012 at 2% from a previous forecast of 2.4% in June and said the unemployment rate will remain above 8% this year.

But the Central Bank expects growth to accelerate as much as 3% in 2013, up from a previous projection for 2.8%. And for 2014, the Fed projected growth between 3% and 3.8%.

On economic data front, jobless claims rise 15,000 to a seasonally adjusted 382,000, hitting the highest in two months. And the producer price index jumped in August, rising by the most in three years, as energy cost soared.