The Dow Jones industrial average rose 163 points, or 1 percent, to 17,359 as of 12:05 p.m. Eastern time. The Standard & Poor's 500 index rose 19 points, or 1 percent, to 2,014 and the Nasdaq composite rose 55 points, or 1.2 percent, to 4,622.

Both the Dow and the S&P 500 are back at record highs and the Nasdaq composite is at its highest level in 14 years

The Bank of Japan surprised investors by announcing it would increase its bond and asset purchases by 10 trillion yen to 20 trillion yen ($90.7 billion to $181.3 billion) to about 80 trillion yen ($725 billion) annually. The announcement came after economic data showed that Japan's economy remained in the doldrums following a sales tax hike in April. Japan's inflation slipped and household spending fell in September and the country's unemployment ticked up.

The move comes only two days after the Ministry Federal Reserve brought an end to its own bond-buying program. Investors have been hopeful that the European Central Bank might also start buying bonds to stimulate that region's economy by keeping interest rates low and injecting cash into the financial system. That form of stimulus is called quantitative easing, also known among investors as "QE."

"The Japanese central bank has taken the QE baton from the Fed, and equity traders couldn't be happier," said David Madden, market analyst at IG.

The yen weakened sharply following the Bank of Japan's announcement. The yen slumped 2.7 percent against the dollar to 112 yen. The Japanese currency is trading at the lowest level in more than five years. Japanese companies typically like a weak Japanese yen because it makes their exported goods cheaper abroad.