U.S. stocks pared gains after the Federal Reserve announced its decision to lower its benchmark interest rate by three-quarters of a percentage point in a bid to ease concerns that the US economy is slipping into a recession.

The Standard & Poor's 500 Index added 27.45 points, or 2.2 percent, to 1,304.05 at 2:17 p.m. in New York, paring a gain of as much as 3.1 percent. The Nasdaq Composite Index increased 44.06, or 2 percent, to 2,221.07. The Dow Jones Industrial Average gained 203.77, or 1.7 percent, to 12,176.02 after gaining 310 points earlier.

The S&P 500 dropped almost 12 percent since Sept. 17, the day before the Fed cut its benchmark lending rate for the first time in four years.

Today's policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity,'' the Federal Open Market Committee said in a statement after meeting today in Washington. Downside risks to growth remain.

The blue chips were up close to 290 points shortly before the Fed's decision was released. They pulled back to a gain of about 190 points before heading higher again.