The Dow Jones industrial average rose above 21,000 points for the first time in what was the biggest gain for the blue-chip index so far this year.
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Banks were the biggest gainers amid heightened expectations that an improving economy will lead to higher interest rates. Energy stocks also notched big gains. Utilities and real estate stocks lagged. The dollar strengthened against the yen and euro and other major currencies. Bond prices fell, as did the price of crude oil and gold.
Optimism over corporate tax cuts, deregulation and other business-friendly policy proposals reiterated by President Donald Trump during a speech before Congress helped fuel the rally. Growing speculation that the Federal Reserve may soon elect to raise interest rates again also helped put traders in a buying mood.
"We're seeing a strong risk-on rally in the face of rising expectations of Fed action as early as March based on a belief there will be a pro-growth agenda that gets enacted," said Bill Northey, chief investment officer of the Private Client Group at U.S. Bank. "It's been what I would characterize as a bit of market euphoria on the back of the president's address to the joint session of Congress last night."
The Dow jumped 303.31 points, or 1.5 percent, to 21,115.55. At one point, the 30-company average was up more than 356 points. The Dow hadn't been up more than 300 points in one day since November.
The Standard & Poor's 500 index gained 32.32 points, or 1.4 percent, to 2,395.96. That's the biggest single-day gain for the index, the benchmark favored by professional investors, since early November.
The Nasdaq composite index added 78.59 points, or 1.4 percent, to 5,904.03. Small-company stocks continued to outpace the rest of the market, a bullish signal on the economy. The Russell 2000 index rose 26.95 points, or 1.9 percent, to 1,413.64.
All four indexes closed at new all-time highs. Each had set new highs last month.
Bond prices fell and yields rose after a key Federal Reserve official, New York Fed President William Dudley, said the case for raising interest rates had gotten stronger. The 10-year Treasury yield rose to 2.46 percent from 2.40 percent late Tuesday.
Strong gains in major global stock indexes overnight and into early Wednesday hinted at the possibility of another milestone day for Wall Street.
Better-than-expected company earnings and outlooks from Lowe's, Big 5 Sporting Goods and other companies also helped give the market a boost.
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But it is the prospect of more profitable days ahead for Corporate America that encouraged investors to pile into stocks.
On Tuesday night, Trump struck a less confrontational tone than usual and steered away from dramatically negative descriptions of the state of the U.S. economy. Trump also reaffirmed his pledges to reform taxes, slash red tape and ramp up spending on defense and infrastructure projects, though his remarks offered few new policy specifics. The proposed reforms have helped send U.S. stock benchmarks to record highs in the weeks since the election in November.
"The market has shifted from being worried about lower growth for longer, to expecting more growth sooner rather than later," said Chris Zaccarelli, chief investment officer for Cornerstone Financial Partners.
Financials led all other sectors in the S&P 500, climbing 2.8 percent. The sector is up 8.1 percent this year. JPMorgan Chase climbed $2.98, or 3.3 percent, to $93.60. Goldman Sachs rose $4.65, or 1.9 percent, to $252.71.
Traders bid up shares in several companies that reported strong quarterly results or outlooks.
Lowe's climbed $7.08, or 9.5 percent, to $81.45, while Big 5 Sporting Goods gained $1.75, or 13 percent, to $15.20.
Builders FirstSource, a maker of building materials, jumped 12.4 percent, getting a boost from rising lumber prices. The stock gained $1.60 to $14.54.
Babcock & Wilcox Enterprises was among the biggest laggards. The energy sector supply company sank 37.4 percent after its latest quarterly report card and guidance fell short of financial analysts' expectations. The stock lost $6.17 to $10.33.
Etsy slumped 11.8 percent after the online crafts marketplace issued guidance that fell short of Wall Street's expectations. The stock shed $1.43 to $10.69.
Markets overseas posted solid gains.
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In Europe, Germany's DAX rose 2 percent, while France's CAC 40 gained 2.1 percent. Britain's FTSE 100 picked up 1.6 percent. Earlier in Asia, Japan's benchmark Nikkei 225 gained 1.4 percent and Hong Kong's Hang Seng added 0.2 percent.
U.S. crude fell 18 cents to $53.83 a barrel in New York. Brent crude, used to price international oils, lost 15 cents to close at $56.36 a barrel in London.
Wholesale gasoline shed 5 cents, or 3 percent, to close at $1.68 a gallon, while heating oil slid 2 cents to $1.62 a gallon. Natural gas rose 3 cents to close at $2.80 per 1,000 cubic feet.
The dollar rose to 113.71 yen from 112.17 yen. The euro slipped to $1.0544 from $1.0597.
The price of gold fell $3.90 to $1,250 an ounce. Silver added 2 cents to $18.44 an ounce. Copper rose 2 cents to $2.73 a pound.
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