Rally Shifts Into Higher Gear

"Goldilocks" was back on traders lips Thursday as earnings anxiety eased while the beige book balanced out Wednesday's FOMC minutes in terms of rate hikes and inflation expectations.

The Federal Reserve's beige book indicated that "economic activity continued to expand" since the last report in September, and just two Fed districts say growth "cooled" from the prior month compared with five in September. The Fed reported that price pressures were contained but emphasized the tight labor market more than it did in the last beige book report. Still, any concerns about wage inflation were swept aside by Wall Street's rising sense of optimism.

"There is a perception around that we may have seen the highest levels of crude oil for a while," says Michael Driscoll, director of listed trading at Bear Stearns. "And if we're not looking for rate cuts, we've seen the end of rises."

Such sentiment helped the Dow Jones Industrial Average add 0.8%, or 95.57 points, to finish at another record close of 11,947.70. The Dow also hit a record intra-day high of 11,959.63.

The S&P 500 added 0.95% to close at 1362.83 at a new five-plus-year high, and the Nasdaq Composite finished up 1.6% at 2346.18. Gainers led losers by more than 3 to 1 in both Big Board and Nasdaq trading, and volume was solid.