Stocks soared as steadying consumer prices calmed the market's jitters about encroaching inflation. The Nasdaq composite index, buoyed by recovering technology shares, achieved its largest one-day point gain.
The Dow Jones industrial average advanced 189.96, to 10,784.95, its best one-day gain since May 3, when it rose 225.65.
Boosted by strong earnings from business software maker Oracle, the Nasdaq composite shot up 103.16, to 2517.83, surpassing its previous record for a one-day point gain of 96.05, set Feb. 11.
The Standard & Poor's 500-stock index rose 29.25, to 1330.41.
The markets steadily advanced after the Labor Department reported that May consumer prices, excluding the volatile energy and food categories, rose a modest 0.1 percent. Clothing and auto prices declined, while medical and housing costs edged higher.
"Inflation was tame on virtually all fronts, with some key prices actually falling," said Sherry Cooper, chief economist at Nesbitt Burns, calling the market's advance a "relief rally."
The markets had been anxiously awaiting the report as a barometer of inflation in the prospering economy.
A surge in April's consumer price index helped prompt the Federal Reserve to warn last month that it might boost interest rates to slow the economy's growth. Traders have been expecting an increase at the next meeting of the Fed's policy-setting Open Market Committee on June 29-30, and stock investors have been worried about the effect higher rates would have on corporate profits.
"Today's CPI number increases the likelihood that if and when we get a Fed tightening, it's more likely to be a one-time event versus a series of tightenings," said Charles White, president and portfolio manager at Avatar Associates. "It by no means indicates that we're out of the woods."
So far this year, the annual rate of inflation felt by consumers is 2.6 percent, compared with a 1.6 percent rise for all of 1998, the smallest in a dozen years.
In the bond market, which had also braced itself for signs of rekindled inflation, interest rates fell further from last week's 19-month high of 6.16 percent. The yield on the 30-year Treasury bond dropped soon after today's inflation report and closed at 6.06 percent, down from 6.11 percent late Tuesday, as the benchmark bond's price rose $6.25 per $1,000 invested.
The price report also spurred a rally in Latin American stocks, bonds and currencies by easing concern that the region's borrowing costs would rise and stunt economic growth.
Mexico's bolsa surged 6.2 percent, to 5628.58, its biggest one-day gain in five months. Brazil's Bovespa index gained 4.1 percent, to 11,643.51, and Argentina's Merval rose 2.3 percent, to 517.06. Chile's Ipsa index rose 2.7 percent, to 123.34, and stocks also rose in Peru.
"The region as a whole is breathing a sigh of relief," said Edgar Amador, an economist at Stone & McCarthy Research Associates in Mexico City. "The market had been pricing in a sizable tightening of interest rates."
On Wall Street, meanwhile, technology stocks enjoyed robust gains, led by Oracle and America Online.
Oracle closed up 7-13/16 at 32-15/16 after reporting a 31 percent increase in quarterly earnings Tuesday. The earnings performance lifted investors' spirits, White said.
America Online rose 11 3/4 to 106 1/2.
Amazon.com closed up 15-3/16 at 111-11/16 after announcing it would invest about $45 million in a 1.7 percent stake in the Sotheby's auction house. The centerpiece of the alliance will be a joint Web site.
Advancing issues outnumbered declining ones by 13 to 7 on the New York Stock Exchange, where trading volume totaled 806.9 million shares, up from 696.7 million on Tuesday.
The NYSE composite index rose 9.89, to 632.17; the American Stock Exchange composite index rose 1.00, to 764.92; and the Russell 2000 index rose 7.19, to 441.20.
Japan's Nikkei stock average fell 0.32 percent. Germany's DAX index rose 0.72 percent, Britain's FT-SE 100 rose 0.83 percent, and France's CAC-40 advanced 1.44 percent.