Stocks added to gains after Federal Reserve Chairman Ben Bernanke spoke to the press, hitting new highs ahead of the market's close.
The Dow Jones Industrial Average rose 100 points after rallying to its highest levelsince June 2008 on Tuesday.
Among Dow components,General Electric and Pfizer led gainers, while Cisco lagged.
The S&P 500 and the Nasdaq gained after trading flat to lower earlier. Both indices also hit new multi-year levels on Tuesday. The CBOE Volatility Index, widely considered the best gauge of fear in the market,fell to nearly 15.
All key S&P 500 sectors rose, led by telecom and health care.
The markets added to gains as Bernanke responded to questions, probably because "there's no curve ball," said Jeremy Zirin, chief U.S. equity strategist at UBS Wealth Management.
"This is brand new territory," Zirin said, and the markets had some anxiety that Bernanke could say something that would throw the markets off course.
Also, Zirin said, "I think Bernanke has done a very, very good job of explaining in layman's terms the process the Fed goes through in establishing policy. To some degree, they are giving Bernanke a thumbs up."
The press conference also illuminated what the Fed means when it says it plans to keep rates low for an "extended period." In response to a question, Bernanke said, "it's a couple of meetings," which means a minimum of about three months, Zirin said.
"The market hates uncertainty, and now there’s one less bit of uncertainty," he said.
Zirin said Bernanke also did a good job of explaining that the inflection point of when the Fed will begin tightening — and when investors will begin shying away from riskier assets — is not happening soon, "and will only happen based on their fundamental assessment of economic sustainability."
"I think in a roundabout way, he clearly, in my opionon, left the door open for further easing," said Kenneth Polcari, managing director of ICAP Equities.
That's because while the Fed doesn't plan a third round of quantitative easing, they plan to continue buying Tresaurys with the proceeds of maturing securities. But Polcari is concerned the Fed isn't taking inflation pressures seriously enough.
"Net-net, even though in the short term that’s good for the market — that the government support is there — that only causes me to be more nervous down the path." And, Polcari notes, the market may continue to rise, but it's doing so on low volume, "and that's concerning."
In prepared remarks before the press conference, Bernanke gave the longer run projections for economic growth, inflation, and unemployment by members of the Federal Reserve.
The Fed's longer run projections for gross domestic project came down to 3.1 percent to 3.3 percent from 3.4 percent to 3.9 percent, Bernanke said, while the Fed's longer run projections for the unemployment rate fell to 8.4 percent to 8.7 percent from 8.8 percent to 9 percent.
The Fed's inflation projections, meanwhile, rose to 2.1 percent to 2.8 percent from 1.3 percent to 1.7 percent, while the forecast for core inflation rose to 1.3 to 1.6 percent form 1.0 percent to 1.3 percent, Bernanke said.
In an earlier statement after its two-day meeting, the FOMC reiterated the need to continue to support the economy, and did not express long-term concerns about inflation, although the central bank did acknowledge inflation was more of a factor lately. The Fed said it would keep short-term interest rates unchanged.
"Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued," the Fed said in a statement.
The rush of earnings results continued this morning. Of the 220 companies that have reported so far—representing 44 percent of all S&P 500 companies—73 percent have beaten earnings estimates, while 68 percent have beaten revenue estimates, according to Thomson Reuters. Earnings are up 17.8 percent so far, Thomson Reuters said.
Among key earnings, Amazon.com gained despite a disappointing first-quarter earnings results released after the bell Tuesday, as the Internet retailer raised its revenue guidance for the current quarter. However, analysts were mixed on the stock—at least two brokerages raised their price targets while Caris cut its price target on the firm to $220 from $230.
Broadcom plunged more than 10 percent to lead the S&P laggards after the chipmaker forecast current-quarter revenue that would fall short of estimates. In addition, at least eight brokerages cut their price targets on the company.
Boeing traded flat after the Dow component beat earnings estimates, but revenue disappointed analysts. The aircraft maker also reaffirmed its full-year forecast. Meanwhile, SunTrust Robinson started coverage of the firm with a $91 price target.
And Northrop Grumman gained after reporting a rise in first-quarter profits and revising its full-year guidance upwards. The defense contractors, which makes unmanned spy plans, said its revenue for the quarter fell 3 percent to $6.73 billion.
Moody's jumped more than 6 percent after the bond ratings company posted a higher-than-expected profit, topping expectations, and raised its dividend as corporate debt issuance jumped.
Several oil companies are reporting earnings this week. BP reported a weaker-than-expected earningsas the oil giant's profits continued to suffer from the Gulf of Mexico spill.
ConocoPhillips fell despite a rise in earnings as the energy company said its production was hurt by the conflict in Libya and by the closure of a pipeline, while Hess soared after the oil firm posted a spike in earnings.
Baker Hughes advanced after the oilfield services company reported that its profit beat estimates thanks to an international turnaround and a rush of U.S. drilling.
ExxonMobil is scheduled to report earnings before-the-bell on Thursday, while Chevron reports on Friday.
Oil prices, meanwhile, recovered after the government reported a jump in oil inventories by 6.2 million barrel, which was more than expected, amid continuing fighting in Libya, and news that gasoline inventories fell 2.5 million barrels, which was more than expected. London Brent crude rose 0.8 percent to $125.13 a barrel, while U.S. light crude rose 0.5 percent to $112.76.
Starbucks, Ebay, Baidu and Norfolk Southern are expected to release earnings results after-the-bell tonight.
And GE shares rose after the conglomerate's top executives said they believe the global economy is continuing to improve and that earnings growth at the largest U.S. conglomerate over the next few years will be the best it has seen in a decade. GE is slated to reporte earnings on Friday before-the-bell.
On the tech front, Appledenied that iPhones track users' movements and blamed privacy concerns partly on a misunderstanding. Meanwhile, ThinkEquity raised its price target on the iPhone maker to $450 from $390.
Cisco shares slipped after BofA/Merrill Lynch cuts its price target on the firm to $22 from $24. However, some analysts said the stock is still a good long-term buy.
John Morris, managing partner at Crestwood Advisors said he is “impressed” with Cisco’s $8 billion in free cash flowand the firm’s ability to remodel the business.
“They’re paying a dividend now and they’re going to be doing some restructuring,” Morris said on CNBC. “The company’s discounting very little future growth and it’s a good entry point in our view to start buying the stock.”
In other company news, said it had struck a deal to buy Swiss medical device maker Synthes for $21.3 billion.
And Merck rose slightly after its board approved $5 billion in stock buybacks.
Citigroup said it plans to hire more than 500 bankers and traders in the next two years to strengthen its securities business and make up the ground lost to its rivals during the financial crisis.
Gold prices briefly broke through $1,520 an ounceand silver also rallied, following the Fed announcement. Meanwhile, the dollar continued to weaken against a basket of currencies.
Barrick Gold traded lower despite reporting a 22 percent gain in first quarter profits thanks to the rising price of gold.
Treasurys added to lossesafter the government auctioned $35 billion in five-year notes. The result came in as expected, with the notes priced at a high yield of 2.124 percent, and a bid-to-cover ratio of 2.77.
On the economic front, new orders for durable goods rose 2.5 percent in March from an upwardly revised 0.7 percent rise in February, according to the Commerce Department. Economists had expected a rise of about 2 percent, Reuters said.
The Chicago Fed's Midwest Manufacturing Index rose to 85 in March from 83.4 in February.
Home loan activityfell 5.6 percent in the week ended April 22 according to the Mortgage Bankers Association. The MBA blamed higher insurance premiums for government-insured loans for hurting demand.
Meanwhile, Standard & Poor's cut its rating outlook for Japan to "negative" from "stable," while affirming the nation's double-A-minus rating, saying the disasters triggered by the earthquake in March would hurt the country’s public finances if taxes aren't raised. Stocks had little reaction to S&P's move, as the Nikkei closed more than 1 percent higher.
Shares in Europe hit an eight-year high amid strong earnings reports.
On Tap This Week:
WEDNESDAY: Earnings after-the-bell from eBay, Starbucks, Allstate, Baidu, Norfolk Southern.
THURSDAY: GDP, jobless claims, pending home sales, 7-year Treasury note auction; Earning before-the-bell from AstraZeneca, Deutsche Bank, Exxon Mobil, PepsiCo, P&G, Royal Dutch Shell, Sanofi-Aventis, Bristol Myers, Motorola Solutions, Sprint, and after-the-bell from Microsoft, Motorola Mobility.
FRIDAY: Personal income, personal spending, Chicago PMI, Consumer Sentiment; Earnings before-the-bell from Caterpillar, Chevron, Merck, DR Horton.
More on CNBC.com