Update (4:05 p.m. EST) The Dow rallied and "picked up 630 points in the final 90 minutes" of trading, Anthony de Rosa at Reuters points out. It closed 429 points up--3.9 percent--for the day. According to the Bespoke Investment Group, this amounts to the 10th largest point gain in the history of the Dow Jones Industrial Average. The rest of the market also recovered with the S&P closing 4.74 percent up and Nasdaq closing 5.29 percent up.

Update (3:52 p.m. EST) The market appears to have rebounded from the low trough reached just after the Fed's announcement. The S&P 500, Nasdaq and the Dow Jones Industrial Average are all back in positive territory for the day. After hitting a low of -1.59 percent, the Dow was trading +0.76 percent at the time of this update.

Update (3:03 p.m. EST) The Wall Street Journal offers a possible explanation for "much of the market freakout:"

Michael Shaoul of Oscar Gruss offers his thoughts: "Long on gloom and short on solution was not a combination that bruised market participants would have wished to see, although even getting this statement out produced dissent at a level unseen during Bernanke's term as Chairman (3 dissenters out of 10 votes cast)." 

Update (2:57 p.m. EST) CNN Money sums up the market's behavior in a tweet: "Stocks in wild fluctuation following the Fed statement. Dow falls as much as 195 points, after being up more than 200 points earlier." The stock market has continued to seesaw and oscillating in and out of negative territory for the day. Gold futures, however, closed at a record high $1,743 an ounce.

Update (2:42 p.m. EST) The stock market reacted dramatically to the Fed announcing its commitment to holding an "exceptionally low" interest rate in order to combat economic insecurity. Immediately, stocks dipped an entire percentage point and recovered it only to fall even further just moments later.

Reuters reports that "Analysts attribute the sell-off to a pileup of bad news" and explains that "Officials had been pinning hopes for an acceleration of U.S. growth in the second half of the year on a healing of supply chain disruptions from Japan's natural disasters, a calming of debt woes in Europe as governments committed to more sustainable fiscal paths, and steady gains in business and consumer confidence in the United States. … But those expectations, along with the Fed's forecast for a growth rate of between 2.7 percent and 2.9 percent in 2011, have appeared increasingly over-optimistic in recent weeks."

Original Post: The Federal Reserve announced on Tuesday that they intend to keep interest rates as low as they can for two years in an effort to reignite the economy. The Board of Governors said in a statement:

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

The Fed also had some good news that "business investment in equipment and software continues to expand."