Interest rates on government bonds plunged this morning, triggering a stock market rally, after a Federal Reserve official said efforts to boost interest rates are "clearly in the eighth inning."

Literal-minded bond traders took the statement by Richard Fisher, president of the Dallas Federal Reserve Bank, to mean the ninth inning will be played when the Fed meets later this month. After one more hike, they reasoned, the Fed will stop, so this is a good time to buy long term government bonds.

Ignoring Fisher's later comment that the Fed's rate game might have to go into extra innings, bond traders started buying 10-year treasury notes, driving rates on those bonds to their lowest level in more than a year -- around 3.9 percent.

Also reinforcing the trend to lower interest rates was a private industry report that the prices businesses are paying for raw materials are falling.

As interest rates on bonds fell, stocks quickly began climbing. But by mid afternoon, they began losing traction -- slipping on oil. Crude futures made their biggest jump in six months, climbing $2.61 a barrel to $54.58. Crude has gone up for seven days in a row, chased by fear that refinery problems could create shortages of gasoline this summer.

The benefits of lower interest rates ultimately outweighed the drag of costlier oil, producing gains for all three major stock market indexes.

The Dow Jones industrial average gained 82 points to 10,549.06. The Standard & Poor's 500 stock index picked up 11 points, closing at 1,202.22. The Nasdaq Stock Market composite index climbed 20 points to 2,087.86.

Today's gains pushed all three indexes to new highs since stocks began to rebound in mid-April.