Wall Street delivered another set of milestones Thursday as a wave of buying sent U.S. stocks solidly higher, driving the Dow Jones Industrial Average above the all-time high it closed at in January.
The S&P 500, the benchmark for many index funds, also hit a new high, eclipsing the peak it reached last month.
Technology stocks, banks and health care companies accounted for much of the broad rally. Energy companies declined along with crude oil prices.
A weaker dollar, which helps U.S. exporters, and a mix of mostly encouraging economic reports helped put investors in a buying mood, a turnaround from earlier in the week when the U.S. and China each announced a new round of tariffs on each other's goods, triggering a sell-off.
"Some of the economic data that came out today continued to show strength," said Lindsey Bell, an investment strategist with CFRA. "Given the strength in the economy, backed by the stimulus from tax reform as well as just fiscal stimulus in general, that should be able to offset some of the impact that we're going to get from tariffs as we go into the end of the year."
The S&P 500 index rose 22.80 points, or 0.8 percent, to 2,930.75. The Dow gained 251.22 points, or 1 percent, to 26,656.98. The Nasdaq composite climbed 78.19 points, or 1 percent, to 8,028.23. The Russell 2000 index of smaller companies picked up 17.25 points, or 1 percent, to 1,720.18.
The road to the latest records was hardly smooth. Shortly after the Dow's all-time high in January, the market plunged in February and again in March, at one point bringing the index down 11.6 percent from its January peak. Investors worried about rising interest rates and the potential impact of the U.S.-China trade dispute on the big industrial companies that are part of the Dow.
With the Federal Reserve having clearly signaled its policy — gradual rate increases, including two more this year — and the U.S. economy gaining strength, the market has recently taken the trade tremors in stride and pushed the Dow and S&P 500 to new highs.
The Dow is now up 7.8 percent for the year, while the S&P 500 is up 9.6 percent. The gains have helped boost investors' stock holdings.
The Federal Reserve said Thursday that the value of Americans' stock and mutual fund portfolios rose $800 billion last quarter, helping to boost U.S. household wealth to a record $106.9 billion in the April-June quarter. At the same time, stock market wealth has been flowing disproportionately — and increasingly — to the most affluent households. The richest one-tenth of Americans own about 84 percent of the value of stocks.
The Dow and S&P 500 were on course to set record highs from the get-go Thursday as investors pored through a batch of economic data.
The Labor Department's weekly tally of applications for unemployment aid was lower than expected, with claims slipping last week to 201,000. That's the lowest level since November 1969.
An economic index from the Federal Reserve's bank in Philadelphia also topped forecasts, and the Conference Board's index of leading economic indicators, designed to anticipate economic conditions three to six months out, rose 0.4 percent last month. While that came in slightly below forecasts, it still suggests the economy is on sure footing, said Tracie McMillion, global head of asset allocation for Wells Fargo Investment Institute.
"With a (reading) that high it's very unlikely that there's a recession on the horizon," McMillion said. "The U.S. market is responding to this foundation of economic strength. Pair that with a dollar that has started to depreciate a little bit and that's good news for U.S. companies that trade abroad."
A weaker dollar is particularly favorable for large-cap companies that do business overseas, because it makes their products more competitive.
The dollar rose to 112.48 yen from 112.27 yen on Wednesday. In other currency trading, the euro strengthened to $1.1776 from $1.1674. The British pound climbed to $1.3268 from $1.3145.
Mixed data on U.S. home sales and mortgage rates weighed on homebuilding stocks.
The National Association of Realtors said sales of previously occupied homes were flat in August after declining the previous four months. Separately, mortgage buyer Freddie Mac said the average rate on 30-year, fixed-rate mortgages jumped to 4.65 percent this week, the highest level since May.
William Lyon Homes tumbled 7.8 percent to $17.20.
Starting Monday, the U.S. will place a 10 percent tariff on another $200 billion worth of Chinese goods. The tariffs will rise to 25 percent on Jan 1. Beijing has said it would take "counter measures," which includes hitting $60 billion worth of U.S. imports, including coffee, honey and industrial chemicals, with retaliatory taxes.
"Part of why you're seeing such significant upside today is the amount of the tariffs was less than expected," Bell said. "The market is still optimistic that we will resolve this issue, perhaps not before the midterm (elections), but hopefully before the end of the year."
Some of the biggest gains Thursday went to technology companies. Apple gained 0.8 percent to $220.03, while Microsoft climbed 1.7 percent to $113.57.
Health care companies also posted solid gains. Cardinal Health rose 2.3 percent to $55.17.
Canadian marijuana producer Tilray slumped 17.6 percent to $176.35 a day after the stock soared 38 percent.
Bond prices rose. The yield on the 10-year Treasury fell to 3.06 percent from 3.08 percent late Wednesday.
Gold rose 0.2 percent to $1,211.30 an ounce. Silver gained 0.2 percent to $14.31 an ounce. Copper added $0.4 percent to $2.74 a pound.
Benchmark U.S. crude fell 0.4 percent to settle at $70.80 a barrel in New York. Brent crude, used to price international oils, dropped 0.9 percent to close at $78.70.
In other energy trading, heating oil gave up 0.8 percent to $2.23 a gallon, wholesale gasoline lost 0.4 percent to $2 a gallon and natural surged 2.3 percent to $2.98 per 1,000 cubic feet.
Major indexes in Europe also notched solid gains Thursday. Germany's DAX rose 0.9 percent, while France's CAC 40 climbed 1.1 percent. Britain's FTSE 100 added 0.5 percent.
Markets in Asia were mixed. Japan's Nikkei 225 finished flat. The Kospi in South Korea added 0.7 percent. Hong Kong's Hang Seng index rose 0.3 percent. Australia's S&P/ASX 200 dropped 0.3 percent. Shares fell in Taiwan but rose in Indonesia, Thailand and Singapore.