The stock market, eager for indications of flexibility in Federal Reserve policy, jumped today at signs that the Fed appears unlikely to tighten credit sharply and had its best day of the year as the Dow Jones Industrial Average gained almost 31 points.

But the bond market, generally more attuned to the Fed policy than the stock market, had a flat session as traders continued to express concerns about how the Fed would cope with this year's rapid growth in the money supply. After sharp gains early in the day, both municipal and corporate bonds ended the day up only slightly, and long Treasury bonds fell one point.

Fed Chairman Paul A. Volcker said yesterday the nation's central bank has tightened credit slightly, but not to the point where the current economic recovery would be threatened. While many stock analysts saw Volcker's statement as a positive sign for the near term, there was concern that the Fed's actions would be insufficient to control the money supply growth, requiring further credit tightening later on and ultimately, higher interest rates.

The Fed's actions ."reduced the possibility of near-term tightening in analysts' eyes," said Maury Harris, vice president and senior economist at Paine Webber Inc. "The bond market people already knew this."

"The bond market is correct to be skeptical," said Lee Idleman, Dean Witter Reynolds research director. "I'm not so sure how far this rally is going to get. There is no question that a wide-open monetary policy is helpful for engineering a recovery and helping profits. You have to wonder what those profits will be worth and there are a lot of questions about how much money we'll print. In part, the rally was a fluke."

But the stock surge represented the sharpest one-day rise in the Dow industrials in eight and a half months as each of the 30 stocks that make up that average rose in heavy trading. Volume on the New York Stock Exchange reached its highest level in five weeks, over 109 million shares, up from a 74 million share day Tuesday. The Dow industrials closed at 1,227.86.

Consequently, most stock traders were ebullient. "The psychology turned 180 degrees today and psychology is in fact a tremendously important part of the stock market," said Charles Lewis, vice president at Shearson/American Express Inc.

On the American Stock Exchange, the Amex index gained 4.62 points to end trading at 245.33. On the over-the-counter market, the Nasdaq index closed at 316.76, up 5.59 points.