NEW YORK - Stocks are holding on to sharp gains after the Federal Reserve said economic activity is "leveling out."

The assessment issued by the central bank was modestly more upbeat than in June, when the Fed said the economy was shrinking at a slower pace.

However, the Fed signaled it would soon end its program to buy Treasury securities. The program was started to help the credit markets right themselves after the crisis that paralyzed them last fall.

The Fed statement follows a two-day meeting on interest rates, which were left unchanged.

The Dow Jones industrials are up 127 at 9,368. The Standard & Poor's 500 index is up 12 at 1,006 and the Nasdaq composite index is up 31 at 2,000.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

NEW YORK (AP) - Investors seized on a buying opportunity Wednesday, picking up bargain stocks after a big pullback.

Stocks jumped in light trading Wednesday as investors awaited the Federal Reserve's interest rate announcement. Major stock market indicators rose more than 1 percent, including the Dow Jones industrial average, which gained 125 points to reverse a sharp slide Tuesday.

For months, investors have been looking for evidence that the economy is strengthening and pulling out of recession. Traders pay particular attention to the Fed's assessments of the economy. The latest is due at 2:15 Eastern when the central bank concludes a two-day meeting on interest rates.

It is widely expected that the central bank will hold the federal funds rate near zero. What investors are uncertain about it how the Fed will size up the economy - whether it sees further signs of strengthening that would justify the gains in stocks since the spring.

Chuck Widger, CEO of investment management firm Brinker Capital Inc. in Berwyn, Pa., said investors are looking for the Fed to signal it will maintain supports for the economy like the purchase of mortgage debt to hold down interest rates.

"The market quiet clearly is anticipating steady as you go," he said. "We've made significant progress in healing both the financial system and the economy but there is still very important work to do. The Fed is going to stay on the job."

The market's jump wasn't typical for the hours before a Fed announcement. Traders tend to remain cautious and make only small moves.

Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Ill., said improved quarterly results from luxury homebuilder Toll Brothers and retailer Macy's Inc. could be signaling that consumption is increasing.