Data showed the services sector grew in October for a second straight month, while U.S. companies reduced jobs last month at the slowest pace in more than a year.

"The (services sector gauge) is a little lower than expectations, but it still shows improvement, and that's what the market is reacting to," said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.

"Along with the positive (jobs) number, we're getting a good market reaction. The data gives the bulls a little bit of fuel."

The Dow Jones industrial average <.DJI> jumped 136.79 points, or 1.40 percent, to 9,908.70. The Standard & Poor's 500 Index <.SPX> gained 14.31 points, or 1.37 percent, to 1,059.72. The Nasdaq Composite Index <.IXIC> rose 21.66 points, or 1.05 percent, to 2,078.98.

Health insurers gained as investors bet that key Republican victories around the United States could slow U.S. President Barack Obama's healthcare reform package. The Morgan Stanley Healthcare Payor index <.HMO> rose 7.1 percent.

The statement from the Federal Open Market Committee is due at about 2:15 p.m. EST. Expectations are for the Fed to keep interest rates near zero, and reaffirm that policies supporting the economy will stay in place for some time, even as signs of recovery mount.

"The likelihood is (the Fed) will keep the language almost identical to the last statement, while highlighting the slightly better economic news," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

"Quantitative easing will remain in effect into the new year, meaning financial markets will continue to have large amounts of liquidity, and will help promote risk taking."

The U.S. dollar stumbled 0.7 percent against a basket of currencies <.DXY> on growing risk appetite.

(Additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)