U.S. stocks closed higher on Thursday, with the Nasdaq having another record-setting session, as investors digested several economic data releases while processing the Federal Reserve's latest monetary policy decision.
The Dow Jones industrial average rose 156.18 points at session highs before closing about 100 points higher, with Boeing contributing the most gains.
"You had a little bit of a concession before this; ... now you're getting back to where we were," said Gene Tannuzzo, portfolio manager at Columbia Threadneedle Investments. "I think this a bit more of a technical rally, which should make you a little bit cautious."
"It's a hope that the economy is bad enough for the Fed to stay accommodative and good enough to stay in risky assets," he said.
The S&P 500 rose 0.6 percent, with real estate gaining nearly 2 percent. The Nasdaq composite hit a new all-time intraday high of 5,342.88, and posted a record close for the second straight session.
"In particular, it wasn't just that they didn't move rates; ... it's also the expectations of economic conditions over the next couple of years," said Kate Warne, investment strategist at Edward Jones. "The other thing having a bit of an effect are existing home sales and leading indicators. It keeps the Fed supportive for a longer period of time."
The S&P also turned positive for the month.
"Today's action is a relief rally following the Fed's decision," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "We believe the Fed will follow the shallow trajectory towards normalization."
He added, however, that stronger earnings are needed to justify the high valuation in stocks. "At some point, Fed-driven liquidity will have reached its limits."
Existing home sales for August fell 0.9 percent, while economists expected an increase of 1.3 percent. Leading indicators for August, meanwhile, fell 0.2 percent. Before the bell, the Labor Department said weekly jobless claims fell to a two-month low.
"What we really need to look for is if [data released in] August was just an aberration," said Art Hogan, chief market strategist at Wunderlich Securities. If that's the case, "I think the market can continue to grind higher."
The Fed kept interest rates unchanged Wednesday, a was largely expected, but hinted at a possible rate hike before year's end. "The committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives," the central bank's policymaking committee said in a statement.
"When I look back at 2016, it feels like 'Groundhog Day,'" said Roger Bayston, senior director of Franklin Templeton's Fixed Income Group. "I think what's different is that we have a presidential election. The characters that we have in this election are creating uncertainty."
U.S. equities rallied after the decision, with the three major indexes closing about 1 percent higher.
"I had noted that if the Fed had not raised, which they didn't, we were going to go higher. If they had raised rates, we would've sold off for a very short period of time before going back higher. Either way, we would've gone higher," said Randy Frederick, vice president of trading and derivatives at Charles Schwab. He also said the jobless claims number may be constructive for stocks on the stock market.
"When you have a strong jobless claims number like we did, that'st only going to stoke the market higher," Frederick said.
Both Frederick and Hogan said that the market's attention would shift to the U.S. national election. "Depending on which polls you look at, the election is still too close to call."
Polls between Democratic nominee Hillary Clinton and her Republican counterpart, Donald Trump, have narrowed significantly over the past few weeks, according to data from RealClearPolitics.com. Heading into their first debate, Clinton held a 6-point lead over Trump, according to an NBC News/Wall Street Journal poll.
"I suspect that volatility will subside with the Presidential Election ready to take center stage which will protect stocks against an immediate pullback," Jeremy Klein, chief market strategist at FBN Securities, said in a note to clients. "On the other hand, stretched valuations have inserted a ceiling above share prices. The S&P 500 has bumped its head each time its forward multiple has climbed to 17.3x."
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell 16.46 percent after the Fed kept rates unchanged. On Thursday, it traded 11.3 percent lower, near 11.8.
In oil markets, U.S. crude settled 2.16 percent higher at $46.32 per barrel as the dollar fell and following a draw in U.S. crude stocks. The U.S. dollar fell 0.25 percent against a basket of currencies, with the euro trading near $1.1206 and the yen around 100.8.
U.S. Treasurys rose, with the two-year note yield around 0.78 percent and the benchmark 10-year yield near 1.63.
The rose 14.06 points, or 0.65 percent, to end at 2,177.18, with real estate leading all sectors higher.
The Nasdaq advanced 44.34 points, or 0.84 points, to close at 5,339.52.
About five stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 839.04 million and a composite volume of 3.431 billion at the close.
Gold futures for December delivery settled $13.30 higher at $1,344.70 per ounce.
On tap this week:
*Planner subject to change.
Earnings: AutoZone, Rite Aid
Earnings: Finish Line
9:45 a.m. Manufacturing PMI
12 p.m. Philadelphia Fed President Patrick Harker, Atlanta Fed President Dennis Lockhart and Cleveland Fed President Loretta Mester on reinventing communities, transforming economies
12:30 p.m. Dallas Fed President Rob Kaplan speaks at energy forum