Stocks rose sharply Thursday, one day after the Federal Reserve announced a $600 billion plan to stimulate the economy.
The Dow Jones industrial average rose 172.11, or 1.5 percent, to 11,387.24 in midday trading, a day after closing at its highest level since September 2008.
The dollar fell against other currencies as traders anticipated lower U.S. interest rates because of the Fed's massive bond-buying program announced Wednesday. Commodities prices including crude oil rose.
Retailers reported solid sales in October, sending shares of major retailing companies sharply higher. Gap Inc. rose 6.1 percent while Macy's Inc. jumped 4.1 percent.
"Those retail numbers are telling us that the holiday season is going to get off to a good start," said Stephen Jones, the chairman of Jones Villalta Funds.
The Standard and Poor's 500 index rose 16.50, or 1.4 percent, to 1,214.46, coming within two points of its highest closing level of the year. The technology-focused Nasdaq composite index rose 28.75, or 1.1 percent, to 2,569.02.
On Wednesday, the Federal Reserve announced it plans to buy $600 billion in bonds in an effort to spur consumer spending and investments in stocks. The central bank was unusually detailed in its announcement, telling investors that it planned to spend $75 billion a month on bonds until at least the middle of next year.
"Much of today's gains comes as a result of the government pumping money into the market," said Joe Kinahan, the chief derivatives strategist at TD Ameritrade. The Standard and Poor breaking past the psychologically important 1,200 mark may have also brought on another round of buying, he said.
The Fed's announcement is helping to boost share prices overseas as well. The Stoxx 50 index, which tracks blue chip companies in Europe, is up more than 1.1 percent.
In corporate news, shares of BHP Billiton, the world's largest mining company, up 5.1 percent after the Canadian government rejected its $38.6 billion bid to buy Potash Corp. of Saskatchewan. Kraft Foods Inc., Starbucks Corp. and CBS Corp. will announce earnings after the market close.
Shares on the Shanghai Composite index, the most-followed measure of China's stock market, are up 1.8 percent.
The Fed's plan will increase the supply of dollars and most likely push the value of the currency down. The dollar is at its lowest level since December 2009 against a broad basket of currencies, and was down 1 percent against that index Thursday. Energy prices jumped, sending oil up $1.34 to $86.03.
Finance ministers in emerging economies like China and Brazil have criticized the Fed's stimulus plan and said that the added supply of investment dollars could lead to asset bubbles in their countries.
Treasury prices rose sharply following the Fed's announcement of its bond-buying program. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.48 percent from 2.57 percent the day before.