Stocks moved modestly higher, sending the Nasdaq composite index to its 12th new closing high this month, as investors' spirits were boosted by the combination of low inflation, steady economic growth and strong corporate profits.

The Dow Jones industrial average rose 3.06, to 11,203.60. The Nasdaq, which rose 127.28 Tuesday for its biggest one-day point gain ever, rose 26.15, to 3937.30. It was the index's 57th record high close of 1999.

The Standard & Poor's 500 index was up 2.56 at 1435.99, also a new closing high.

"The Santa Claus rally has begun, and playing Santa is Fed Chairman Alan Greenspan," said Alfred Goldman, chief market strategist for A.G. Edwards & Sons in St. Louis. The Federal Reserve on Tuesday left interest rates unchanged, which sent technology stocks soaring to a new high.

The Commerce Department, which today issued its final estimate of third-quarter economic activity, said inflation remained under control during the fall months. The government said the gross domestic product rose at a robust 5.7 percent annual pace, better than its earlier estimate of 5.5 percent.

An inflation gauge tied to the third-quarter GDP rose 1.7 percent, the same as previously estimated. It was a better showing on inflation than the 1.9 percent increase posted in the second quarter.

"We have the best of all worlds, a strong economy and positive inflation readings," Goldman said.

Eastman Kodak, up 4-11/16 at 62-1/16 as of 5 p.m. EST after naming a new chief financial officer, and Merck, up 1 1/8 at 67-3/16, led the Dow higher.

Big gainers on the Nasdaq included biotech firm Amgen, up 2-13/16 at 52-15/16, and software maker Oracle, up 7 3/8 at 105-1/16.

"We saw a little further strength in technology, though it was a more ragged day," said Richard McCabe, chief market analyst at Merrill Lynch & Co. He said investors showed signs of pausing to take some profits from the recent rally, although he predicted stocks would rise more before the year ends.

Technology stocks were mixed with, down 2-3/16 at 97-11/16, and Yahoo, up 13-3/16 at 418 3/4.