NEW YORK – Investors trying to read the economy's tea leaves saw something they liked Wednesday in the minutes of the Federal Reserve's last meeting and reacted by pushing the Standard & Poor's 500 to its first record high close in more than seven years.
The Dow Industrials average also soared into record territory, offsetting a global equities sell-off sparked by a plunge in Chinese stocks.
The Dow average shot up 111.74 points, or 0.83 percent, to close at 13,633.08, just off a lifetime high of 13,636.09 set earlier in the session.
The Nasdaq notched its highest finish in more than six years. On Wall Street, this was the third day of gains for all three major U.S. stock indexes.
The Standard & Poor's 500 Index jumped 12.12 points, or 0.80 percent, to finish at a record 1,530.23. At this level, the S&P 500 closed above its previoius record of 1,527.46, which was set on March 24, 2000, in the waning days of the dot-com stock bubble. The Nasdaq Composite Index ended up 20.53 points, or 0.80 percent, at 2,592.59.
Minutes from the Federal Reserve's latest policy meeting showed officials thought risks to growth had diminished "slightly", boosting optimism about the outlook for corporate profits.
Takeovers led by CDW Corp. and Viacom Inc.'s plan to buy back up to $4 billion of its own stock helped investors push aside concerns about a sell-off in China's stock market.
Big gainers included oil company shares such as Exxon Mobil Corp.(XOM), which rose after oil prices advanced.
Even though the Fed minutes said inflation remains a "predominant concern," the downside risk to the economy has been reduced slightly.
"The market is just showing that it is ignoring potholes, which means we still have upside momentum. We had two good reasons for the market to stumble today but it ignored both," said Al Goldman, chief market strategist at A.G. Edwards in St. Louis, Missouri.
"You are in a market where people are in a glass-is-half-full attitude."
Stocks opened sharply lower, with the Dow average down more than 50 points within the first half-hour.
But around midday, the market mounted a recovery, albeit with bouts of volatility that caused indexes to swing from flat to lower until right after the release of the Fed's minutes.
Boeing Co. (BA), the plane maker and defense contractor, advanced 2.1 percent to close at $100.55 on optimism about orders. The stock was the Dow's second-biggest advancer.
Exxon lent the biggest boost to the S&P 500, with its stock finishing up 1.7 percent at $84 on the NYSE.
On the Nasdaq, Apple Inc. (AAPL) led gains. Apple ended up 3.9 percent at $118.77 after two brokerages raised their price targets on the stock.
Biogen Idec's shares climbed 5.9 percent to close at $52.13 on the Nasdaq. The stock's advance came a day after the pharmaceutical company said its board had authorized a $3 billion share repurchase.
Technology supplier CDW said late on Tuesday it had agreed to be bought by Madison Dearborn Partners LLC for $7.3 billion. Shares of CDW ended up 2.5 percent at $85.17 on the Nasdaq.
Shares of Viacom finished up 1.4 percent at $44.50 on the NYSE after the entertainment company, whose brands include MTV, said it plans to buy back up to $4 billion of common stock under a new share-repurchase program.
In overnight trading, China's main stock index fell 6.5 percent after the government's announcement of an increase in the tax on stock trading. It was the Chinese market's worst daily drop since the slide on Feb. 27, which had triggered a sharp sell-off in stock markets around the world.