Relief over the Federal Reserve's slow-and-steady interest rate plan fueled another day of gains on Thursday, pushing the Nasdaq to clock a record close for the second session in a row.
The S&P 500 was up 0.6%, the Dow Jones Industrial Average jumped 0.5%, and the Nasdaq rose 0.84%.
The Fed signaled plans to keep rates lower for longer on Wednesday. The dot-plot forecast and comments from Fed Chair Janet Yellen supported the case for gradual tightening after a small increase in rates this December, as is widely anticipated.
"Lower for longer is perceived as good news," said Brad McMillan, chief investment officer for Commonwealth Financial Network. "With the strong hint about December, markets are clearly on notice, but the lower growth and interest rate projections show that, on balance, the Fed's revised policy stance is considered positive."
The Nasdaq posted a new record close and the S&P 500 and Dow rallied on Wednesday after the Fed opted not to raise interest rates for another month.
The majority of investors are now pricing in the likelihood of a December rate hike. Chances are now at 52%, according to CME Group fed funds futures, up from 48% before the announcement on Wednesday.
"The Fed appears to be positioning for a hike in December, and at this stage we see that outcome as more likely than not," BNP Paribas analysts wrote in a note. "Saying it is waiting for more evidence in the time being, despite the case for a rate hike having strengthened, suggests that barring significant events the rate hike will not be long in coming."
U.S. jobless claims fell to their lowest level since July in the past week, according to the Labor Department. The number of new claims for unemployment benefits fell by 8,000 to 252,000. Analysts expected the number to tick up to 261,000. Claims have held below 300,000 for 81 weeks in a row, their longest streak since 1970.
Constrained supply led to an unexpected dip in existing home sales last month. The National Association of Realtors reported a 0.9% decline in August to a 5.33 million annual rate, its second straight monthly decline. Economists forecast a 5.44 million rate.
Crude oil prices moved higher again on Thursday as a steep decline in weekly inventories released a day earlier continued to feed confidence in a slow recovery in commodities. U.S. oversupply, weaker global demand and breakneck output from some of the world's largest oil producers have beaten down oil prices over the past two years.
West Texas Intermediate crude oil was up 2.2% to $46.32 a barrel by commodity market's close Thursday.
In earnings news, Red Hat (RHT) - Get Report increased after boosting guidance in the wake of a better-than-expected quarter. The developer of a version of open-source platform Linux expects per-share earnings between $2.23 and $2.25 a share for the full year, up from a previous range of $2.19 to $2.23 a share.
Chief Financial Officer Frank Calderoi credited the company's recent quarterly performance with a "record number of deals over $1 million" and overall solid demand. Technical analyst Bruce Kamich of Real Money, TheStreet's premium site for active traders, writes that it's "not unrealistic" to expect Red Hat to hit $87 a share from the stock's current $80 or so. Real Money subscribers can check out his analysis here (non-subscribers can sign up for a free 14-day trial).
Bed Bath & Beyond (BBBY) - Get Report rose despite the company missing estimates on its top and bottom lines. Second-quarter earnings of $1.11 a share fell short of consensus by 6 cents, while revenue of $2.99 billion was shy of forecasts by $60 million. Comparable-store sales fell 1.2%, an unexpected drop, as the retail environment remained competitive.
Rite Aid (RAD) - Get Report fluctuated after a mixed quarter. The pharmacy chain earned an adjusted 3 cents a share, a penny above consensus. Sales increased nearly 5% to $8 billion, though fell short by $200 million. Same-store sales growth of 2.5% came in higher than an estimated 1.9%. Rite Aid's acquisition by Walgreens Boots Alliance (WBA) - Get Report is expected in the second half.
Lennar (LEN) - Get Report gained after agreeing to purchase WCI Communities (WCIC) in a deal worth $643 million. Lennar offered $23.50 in cash and stock for every WCI share, an offer that values WCI at a 37% premium to its Wednesday close. WCI shareholders will vote on the acquisition offer at the end of the year. WCI jumped 39.5%.