The Dow Jones Industrial Average has charged to another record close, bolstered by upbeat corporate news and confidence that the Federal Reserve will keep interest rates low.
The Dow climbed 77.52 points, or 0.5%, to 17,138.20, its 15th all-time high this year. The S&P 500 index rose 8.29 points, or 0.4%, to 1,981.57, and the Nasdaq Composite Index gained 9.58 points, or 0.2%, to 4,425.97.
Investors shifted their attention to US corporate earnings reports, after choppy trading in recent sessions on statements from the Federal Reserve and worries about a Portuguese lender. Good news from overseas helped set a positive backdrop for US trading. And a second day of testimony from Fed chairwoman Janet Yellen reinforced the idea that the central bank will keep interest rates low for an extended period.
"Until you see an increase in long-term interest rates...stocks will be the preferred asset class for investors," said James Abate, who manages $US196 million in two funds for Centre Asset Management. "People don't have much of a choice but to remain invested in equities."
He said that continued low interest rates should spur more deals activity and share buybacks, both of which have helped support stock market gains. He expects interest rates to remain low for some time and has kept a high exposure to US and global stocks in the Centre Multi-Asset Real Return Fund.
Wednesday's gains were fuelled by bullish trading in technology and energy stocks, said Jeffrey Yu, head of US single-stock derivatives trading at UBS. But the rise also extended a rebound from the previous session's lows, he said. Stocks dropped Tuesday morning, as Ms Yellen discussed signs of strength in the US economy.
But since then, "she pretty much went as dovish as possible, given the economic backdrop, which has allowed the market to bounce back," said Mr Yu.
Upbeat reports from technology companies sparked a rally in the sector. Intel led the Dow higher, gaining 9.3% after a better-than-expected earnings report from the company. The chip maker also announced it would add $US20 billion to its share buyback plan.
International Business Machines rose 2.1% on news it struck an agreement with Apple to create business apps and sell iPhones and iPads to IBM's business customers. Apple slipped 0.6%.
Energy stocks led the S&P 500 higher, with the sector up 1.6% as oil prices rebounded from recent declines. Crude-oil futures rose 1.2% to $US101.20 a barrel, after settling below $US100 for the first time since May on Tuesday.
Stocks of small-cap, social media and biotechnology companies extended their steep Tuesday drop. The Russell 2000 Index dropped 0.2%, and the Nasdaq Biotechnology Index lost 1.3%. A Fed report released Tuesday expressed concern about valuations in those corners of the market. The Nasdaq Biotech Index is trading at 44.8 times its expected earnings for the next year, compared with the S&P 500's 15.7, according to FactSet. As of the end of June, the Russell 2000 was trading at 20 times its forecast earnings, according to Russell Indexes.
A few companies in those sectors could eventually justify their lofty valuations, said Jason Pride, director of investment strategy at Glenmede Trust, which oversees $US25bn. But his firm is steering clear.
"Anybody's ability to pick the winner in those situations is probably lower than he thinks it is," he said. "It tends to be a loser's game to do that."
A handful of reports on the US economy also supported stocks. A better-than-expected report on the housing market helped boost home builder shares. And a measure of producer-price inflation came in slightly above expectations in June, rising 0.4% on the month, while a 0.3% rise was expected.
Continued news of deals gave a boost to benchmarks as well. Shares of Time Warner rallied 17% after 21st Century Fox confirmed Wednesday it offered to buy Time Warner last month, but Time Warner rejected the proposal. Fox shares slipped 4.6%.
News from the financial sector was mixed, sending bank stocks in the S&P 500 down 0.1%. BlackRock, the world's largest asset manager, edged up 0.4% after reporting stronger profit growth than Wall Street expected
Bank of America dropped 1.9% after reporting weaker-than-expected quarterly profit. The bank also met with the Justice Department to offer $13 billion to settle a mortgage-securities probe, The Wall Street Journal reported.
The Stoxx Europe 600 rose 1.3%, reversing part of the decline seen over the past week as concerns over the financial health of Banco Espírito Santo and its parent companies rattled markets.
In commodity markets, gold futures rose 0.2% to $US1,299.60 an ounce.
The yield on the 10-year Treasury note, which moves inversely to its price, edged down to 2.540%.