Dow Claws Way to Record

Stocks rise again as the chance of new rate hikes gets even slimmer.
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Updated from 4:26 p.m. EST

Stocks extended their rally to a third session Thursday as an abundance of benign economic data and rate-friendly comments from the

Federal Reserve

chairman quashed any worries about new central bank tightening.

The

Dow Jones Industrial Average

rose 23.15 points, or 0.18%, to 12,765.01, establishing a new all-time closing high. The

S&P 500

was 1.51 points, or 0.1%, higher at 1456.81, and the

Nasdaq Composite

was up 8.72 points, or 0.35%, at 2497.10.

Of the Dow's 30 components, only 13 finished the day in positive territory, led by gains of 2% or more in

Caterpillar

(CAT) - Get Report

and

Boeing

(BA) - Get Report

.

"You need a broad-based rally in order to say that we have an uptrend, so we seem to be struggling more than anything else," said Edgar Peters, chief investment officer with Pan Agora. "We did get some good news for interest rates, but that's not necessarily good news for earnings. We should probably be in store for some consolidation."

Roughly 2.49 billion shares changed hands on the

New York Stock Exchange

. Advancers beat decliners by a 10-to-7 margin. Volume on the Nasdaq reached nearly 1.98 billion shares, with winners outpacing losers 8 to 7.

Fed Chairman Ben Bernanke wrapped up his congressional testimony as he testified before the House of Representatives. During his remarks Wednesday, which were echoed Thursday, Bernanke said the central bank is comfortable with interest rates and that some tentative signs of stabilization have recently appeared in the housing market.

Those benign comments gave stocks a boost Wednesday. The industrials climbed 87.01 points, or 0.69%, and the S&P rose 11.04 points, or 0.76%, to 1455.30. The Nasdaq gained 28.50 points, or 1.16%, to 2488.38.

During the last three sessions, the Dow has surged 212 points and the Nasdaq has jumped 47.

"Mr. Bernanke's testimony continues the incremental reduction in hawkishness evident in the past few months' FOMC statement, though there is nothing here that could be legitimately described as outright dovish," said Ian Shepherdson, chief economist with High Frequency Economics, in a written message. "We don't think this represents a real change in stance, so the market reaction looks overdone."

Meanwhile, the economic docket was filled to the brim. The New York Fed said its Empire State Manufacturing index unexpectedly surged to a reading of 24.4 in February, up from 9.1 in January. Economists anticipated a slight increase to a reading of 11.

On the other hand, data from the Philadelphia Fed showed that manufacturing activity in the mid-Atlantic region fell dramatically in February. The index came in at a reading of 0.6, down from 8.3 in January. Economists expected a slight decline to 4.0.

Elsewhere, the Labor Department said its import price index fell 1.2% last month, mostly in line with expectations. Imported petroleum prices fell 7.3% last month, and natural gas prices tumbled by 12%. Excluding petroleum, import prices were flat for the month.

Jobless claims rose last week by a greater-than-expected 44,000 to 357,000, according to a separate report from the Labor Department. The sharp increase was blamed on inclement weather across the U.S. The less-volatile four-week moving average climbed by 17,500 claims to 326,250.

In another report, industrial production fell 0.5% in January, well below the consensus of an unchanged reading. Capacity utilization fell to 81.2% last month from 81.8% in December, also below consensus.

In equities, the pace of earnings reports has slowed dramatically in the last couple of weeks, but influential names continue to appear. Ahead of the opening bell, oil-services outfit

Baker Hughes

(BHI)

said its quarterly revenue rose more than 20% year over year but its profits fell short of analysts' forecasts. Shares dropped $6.75, or 9.4%, to $65.19.

As for the day's research calls, Goldman Sachs downgraded

AMR

(AMR)

, parent of American Airlines, but upgraded low-fare carrier

JetBlue

(JBLU) - Get Report

.

AMR lost 1.2% to $38.05, while JetBlue gained 4.7% to close at $13.85.

AG Edwards raised its rating on

American Eagle Outfitters

(AEOS)

to buy from hold, and Prudential cut its rating on

Schering-Plough

(SGP)

to neutral from overweight.

American Eagle finished higher by 1.2% to $32.11, and Schering-Plough was off 1.2% to end the session at $24.46.

Treasury prices continued to rally. The 10-year note was up 9/32 in price, yielding 4.70%, and the 30-year was rising 17/32 to yield 4.80%.

Commodities lost ground. Oil futures dipped by a penny to close at $57.99 a barrel on the New York Mercantile Exchange, and gold lost 60 cents at $671.40 an ounce.

Stocks were mixed in Europe but rose in Asia. London's FTSE 100 was up 0.2% to 6433, and Frankfurt's Xetra DAX was 0.1% weaker at 6957. Tokyo's Nikkei was up 0.8% at 17,897, and Hong Kong's Hang Seng advanced 1.6% to 20,538.