Stock market indexes surged more than 4 percent as a surprised Wall Street applauded the Federal Reserve's unprecedented decision to slash its target for a key interest to a record-low range.

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NEW YORK — A surprised Wall Street surged on the Federal Reserve’s historic decision to slash its target for a key interest to a record-low range and took comfort from the central bank’s pledge to use “all available tools” to jump-start the economy.

The Dow Jones industrial average closed up 359.61, or 4.2 percent, at 8,924.14. Broader market indexes also were higher. The Standard & Poor’s 500 index was up 44.61, or 5.1 percent, at 913.18, and the technology-heavy Nasdaq composite index was up 81.55, or 5.4 percent, at 1,589.89.

Wall Street was clearly caught off-guard by the Fed’s decision to lower its target for the rate at which banks lend each other money to a range of zero to 0.25 percent.

Many analysts had expected the Fed to make a smaller cut to 0.5 percent from 1 percent. Establishing a range for its target was also unprecedented. The central bank also cut the lending rate for loans directly to banks.

The array of measures the Fed pointed to left Wall Street little room for doubt that the central bank will do what is necessary to help bring an end to the longest recession in a quarter-century.

“All in all, it’s good news for stocks,” said Jack A. Ablin, chief investment officer at Harris Private Bank. “It gave the market a little bit more than they expected.”

The fact that the Fed targeted a range indicates that policy makers did not want to bring the rate all the way to zero, Ablin said. Such a move could have had problematic implications for money market funds, whose fees could then outpace yields.

The Fed’s statement said policy makers have other tools available — which means the Fed is saying that “we’re pretty much out of dry powder on our primary weapon, but we’ve got other weapons available to combat deterioration in the economy,” Ablin said.

“I inferred that rates are going to stay this low for a while.”

The Fed’s moves appeared in part calculated to damp worries that the Fed had few tools left with which to prop up the economy.

President-elect Obama said Tuesday the Fed is “running out of the traditional ammunition” to combat the recession and that it was important that other government branches “step up.”

Demand for government bonds surged. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.37 percent from 2.53 percent late Monday. The yield on the 30-year fell to a record low 2.88 from 2.99 percent late Monday.

Meanwhile, the yield on the popular three-month T-bill — whose yield has at times gone negative due to frenzied buying — was at 0.02 percent, flat with late Monday.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell 67 cents to $43.84 a barrel on the New York Mercantile Exchange.

Markets overseas were mixed. Japan’s Nikkei stock average fell 1.12 percent, while Hong Kong’s Hang Seng index rose 0.55 percent. Britain’s FTSE 100 rose 0.74 percent, Germany’s DAX index rose 1.61 percent, and France’s CAC-40 rose 2.07 percent.