Traders have been cheered by news that the Fed will continue to boost the US economy
US shares closed at record levels after the US central bank indicated that its efforts to boost the economy would continue for now.
The Dow Jones Industrial Average closed 1.1% higher at 15,460.92 and the broader S&P 500 added 1.3% to to end at a new peak of 1,675.02.
Both measures surpassed previous record highs hit in late May.
Investors have been focusing on when the US Federal Reserve (Fed) might end its massive bond-buying programme.
Fed chairman Ben Bernanke had made previous comments suggesting the policy would be phased out.
But on Wednesday Mr Bernanke clarified his position, saying a "highly accommodative" policy was needed for the foreseeable future.
Market stabilitySince late last year, each month the Fed has been buying $85bn (£56bn) in Treasury and mortgage bonds.
The purchases have kept interest rates low, with the aim of encouraging more Americans to buy homes and cars, and hopefully bolster economic growth.
Investors worry that once the Fed starts scaling back its bond buying, interest rates will rise.
"Having Bernanke come out obviously worked, giving the market some stability," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
Microsoft was one of the biggest winners on the stock market on Thursday.
Its shares jumped 2.8% after the company announced a plan to overhaul its structure.
Source: BBC News - Business http://www.bbc.co.uk/news/business-23281644#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
