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.