Stocks trimmed gains in the final minutes of Wednesday's session but still ended at new highs in light trading as investors remained optimistic about the prospects for equities next year.
The Dow Jones Industrial Average rose 9.84 points, or 0.1 percent, to close at 11,585.38, the blue-chip index's highest close since Aug. 28, 2008. The Dow had been up nearly 50 points earlier in the session.
McDonald's, Walt Disney, and Wal-Mart, rose, while Alcoa and JPMorgan slipped.
The S&P 500 rose 1.27 points, or 0.1 percent, to close at 1,259.78, its highest close since September 8, 2008.
The broad market index has marched steadily forward since breaking through a resistance level of 1,255 late last week, and was poised to end its best December since 1991. The index has had the fewest down days in a month since at least October 2006, when it fell five days. So far this month, the S&P has fallen just three days.
The Nasdaq also gained, rising 4.05 points, or 0.15 percent, to close at 2,666.93, slightly below a three-year record reached last week. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to just above 17.
Among key S&P 500 sectors, energy, materials, and consumer discretionary rose, while financials and utilities fell.
Volume continued to be light so this week, due to holiday vacations in addition to a snow storm in the Northeast. Volume on the consolidated tape of the New York Stock Exchange was 1.9 billion shares, less than half the usual volume. On the NYSE floor, only 492 million shares changed hands. (Read More: Does Light Volume Really Matter?)
The markets have continued to rise all month. As of the close Wednesday, the Dow rose 5.3 percent for December and 11.1 percent for the year-to-date. The S&P 500 rose 6.7 percent for the month, and nearly 13 percent for the year-to-date. The Nasdaq rose 6.8 percent for December, and 17.5 percent for the year-to-date.
While the tax cut package passed by Congress earlier this month should continue to buoy stocks, investors are showing some hesitance about the future momentum of U.S. stocks as they move into alternative assets—such as futures and commodities—that do not move in tandem with the U.S. equity markets, according to Bob Enck, CEO of Equinox Fund Management, an alternative asset manager.
"The flows into non-correlated assets is telling us there is some caution out there still," Enck said.
Oil closed just above $91 a barrel in light trade, close to a recent 26-month high.
Energy stocks led the market higher, with new 52-week highs seen among oil producers and servicers, such as Chevron, ExxonMobil, ConocoPhillips and Marathon Oil. Exploration and production companies including Murphy Oil,Devon Energy and Apache.
Noble Energy, which also hit a 52-week high, confirmed an offshore property in Israel was the country's largest natural gas find.
Treasury prices rose after the government auctioned $29 billion of 7-year notes,which had a yield of 2.83 percent and a healthy bid-to-cover ratio of 2.86. The successful auction came as a relief to the Treasury market, which had sold off after after an auction of five-year Treasury notes Tuesday that attracted the lowest demand since June.
The 10-year Treasury note ended the session up 1 3/32 points, pushing the yield to 3.3 percent.
The dollar declined against a basket of currenciesafter the Treasury auction, as the euro stabilized. Copper prices continued to soar, as did gold, which gold closed at $1,413.