Stocks continued to soar more than 2 percent on the first day of December after news the Federal Reserve's regional survey showed growth is rising throughout most of the U.S.
The market was strong from the start after an upbeat report on private sector jobs and news that manufacturing activity in China reached a seven-month high.
The Dow Jones Industrial Average gained more than 250 points, a day after stocks ended the month lower .
All 30 Dow components were higher led by Home Depot, Microsoft and Caterpillar .
The S&P 500 and the Nasdaq also jumped. The S&P traded as high as 1,206, surging past 1,200, a key resistance level. The CBOE Volatility Index, widely considered the best gauge of fear in the market, dropped more than 10 percent to below 21.
The key S&P 500 sectors all gained, led by energy, materialsand industrials.
The Federal Reserve's Beige Bookfound 10 of the Fed's 12 regions reported economic growth rose at either a "slight to modest" pace or at a "somewhat stronger" pace. Philadelphia and St. Louis, by contrast, reported business conditions as mixed.
The market surged higher midday after a report by Reuters that the U.S. would be willing to back a larger European financial stability fund by increasing commitments to the International Monetary Fund, according to Reuters. But a report by another news organization contradicted that account.
The dollar plunged against a basket of currencies, as the euro gained. Gold rose above $1,390 an ounce.
The European debt crisis was still in focus after Standard & Poor's said it may downgrade Portugal's debt rating in 3 months. And a senior G20 source revealed to Reuters that G20 deputy finance ministers held a teleconference to discuss "the financial situation in Europe" Monday.
In addition, stocks rallied following a successful bond sale in Portugal, albeit at higher interest rates.
Also on Wednesday, the Federal Reserve released details on $3.3 trillion in emergency loansmade during the 2007-2009 financial meltdown, including who borrowed how much and what collateral they put up.
Citigroup , Merrill Lynchand Morgan Stanley were the biggest borrowers of Fed funds.
However, experts said the disclosures will be interesting, but not meaningful for investors.
Bank of America rallied, recovering some of their losses a day after fears of the potential impact of allegedly leaked documents about the bank sent shares down more than 3 percent.