NEW YORK ( TheStreet) -- Major U.S. stock averages surged Thursday, with the Dow and S&P 500 touching new all-time closing highs, after Federal Reserve Chairman Ben Bernanke tamed market anxieties by saying the Fed will keep its stimulus spigots open for quite some time. Also fueling sentiment Thursday was the Treasury Budget showing a record June surplus of $116.5 billion following substantial dividend payments from Fannie Mae ( FNMA ) and Freddie Mac ( FMCC ). The report pointed to improved fiscal conditions in the U.S. and an easing of pressure among lawmakers to find a compromise on raising the nation's borrowing limit. "This is the getting-back-to-normal trade," Doug Cote, chief market strategist at ING Investment Management U.S., said in reference to a rising bond yields environment and strengthening equity markets. Cote said the best hedge against volatility is investment in equities. "If the Fed tapers, equities go up; if the Fed doesn't taper, equities go up," Cote said. "I don't care,
because the Fed just announced the game is over." The S&P 500 popped 1.36% to 1,675.02 after trading up to 1,676.63 and breaching its all-time closing high of 1,669.16 reached on May 21. The Dow Jones Industrial Average jumped 1.11% to 15,460.92, crossing its all-time closing high of 15,409.39. The index traded as high as 15,483.55 in the intraday. The Nasdaq advanced 1.63% to 3,578.30. Bernanke on Wednesday reassured markets that accommodative monetary policy would remain in place for some time regardless of any substantial drop in the unemployment rate. Bernanke emphasized there were no firm plans yet for a hike in short-term interest rates. "There will not be an automatic increase in interest rate when unemployment hits 6.5%," Bernanke told economists after a speech in Boston. He also said that with the low inflation environment and the job market still in need of more improvement, it will likely be "well sometime after we hit 6.5% before rates reach any significant level." Other bright spots in the market Thursday included Japan's central bank becoming more bullish about its economy and hopes of stimulus from China's central bank. Economic releases before the market open indicated a rise in unemployment claims as well as a drop in import prices. AMD ( AMD) was the top performer on the S&P 500 after Canaccord Genuity upgraded the semiconductor producer to buy from hold on advantages in the manufacturing of game consoles. Shares surged 11.8% to $4.45. Celgene ( CELG) was another top gainer, jumping more than 7.5% to $134.90 after reporting positive results Thursday from a large phase III study seeking to establish the company's multiple myeloma drug as the preferred treatment for newly diagnosed patients. Microsoft ( MSFT) rose 2.8% to $35.68. The company has issued a reorganization letter highlighting that Microsoft's groups will be working closer together, and some major executives will be shifting roles, and in some cases, departing. The company is going to shift more toward combining software and hardware together. "Many people have been talking about a correction especially with large cap stocks in the S&P 500, but it would appear that we've almost had a failed correction at this point," Cam Hinds, a Lincoln, Neb.-based regional chief investment officer at Wells Fargo Private Bank said on the phone. The private bank has $170 billion in client assets under management. "We tried to get one but it hasn't occurred yet," he said. Hinds defines a market correction as a decline of 10% or more. "From its all-time high to its low just a couple of weeks ago, we only had a 6% correction." Economic releases Thursday helped lend support to Bernanke's thoughts, with jobless claims spiking and import prices logging a decline. The Labor Department reported Thursday initial jobless claims rose in the week ended July 6 by 16,000 to a greater-than-expected 360,000, though driven in part seasonal factors, from an upwardly revised 344,000 the prior week. Economists on average were expecting claims of 340,000. The four-week moving average indicative of longer-term trends was 351,750, an increase of 6,000 from the previous week's average of 345,750. "Bernanke continues to affirm their stimulus tilt on a short-term basis, and this morning jobless claims actually jumped, and that was a surprise that would indicate again that in the very short-term tapering is not likely to occur," said Hinds. Continuing claims in the week ended June 29 was a higher-than-expected 2.977 million, an increase of 24,000 from the preceding week's upwardly revised level of 2.953 million. Economists were expecting a read of 2.95 million. Meanwhile the Bureau of Labor Statistics said that import prices in June fell by a more than expected 0.2% adding to evidence that inflationary conditions remain in check. A flat reading was expected. The benchmark 10-year Treasury was jumping 16/32, diluting the yield to 2.572%. The Hong Kong Hang Seng index finished higher by 2.55% and the Nikkei 225 in Japan closed up by 0.39%. Global markets advanced after Bernanke's comments even though China, the world's second largest economy, reported disappointing trade data once again, as it spurred speculation that this would encourage the country's central bank to loosen its monetary policy in order to bolster economic growth. Meanwhile, the Bank of Japan has maintained its aggressive monetary policy while upgrading its outlook on the country's economic recovery. Follow @atwtse -- Written by Andrea Tse and Joe Deaux in New York >To contact the writer of this article, click here: Andrea Tse.