Stocks Returning to 'Normal' With All-Time Highs

Tickers in this article: AMD CELG MSFT ^DJI ^GSPC ^IXIC

NEW YORK ( TheStreet) -- Major U.S. stock averages surged Thursday, with the Dow and S&P 500 touching new all-time closing highs, after Federal Reserve Chairman Ben Bernanke tamed market anxieties by saying the Fed will keep its stimulus spigots open for quite some time.

Also fueling sentiment Thursday was the Treasury Budget showing a record June surplus of $116.5 billion following substantial dividend payments from Fannie Mae and Freddie Mac . The report pointed to improved fiscal conditions in the U.S. and an easing of pressure among lawmakers to find a compromise on raising the nation's borrowing limit.

"This is the getting-back-to-normal trade," Doug Cote, chief market strategist at ING Investment Management U.S., said in reference to a rising bond yields environment and strengthening equity markets. Cote said the best hedge against volatility is investment in equities.

"If the Fed tapers, equities go up; if the Fed doesn't taper, equities go up," Cote said. "I don't care, because the Fed just announced the game is over."

The S&P 500 popped 1.36% to 1,675.02 after trading up to 1,676.63 and breaching its all-time closing high of 1,669.16 reached on May 21. The Dow Jones Industrial Average jumped 1.11% to 15,460.92, crossing its all-time closing high of 15,409.39. The index traded as high as 15,483.55 in the intraday.

The Nasdaq advanced 1.63% to 3,578.30.

Bernanke on Wednesday reassured markets that accommodative monetary policy would remain in place for some time regardless of any substantial drop in the unemployment rate. Bernanke emphasized there were no firm plans yet for a hike in short-term interest rates.

"There will not be an automatic increase in interest rate when unemployment hits 6.5%," Bernanke told economists after a speech in Boston.

He also said that with the low inflation environment and the job market still in need of more improvement, it will likely be "well sometime after we hit 6.5% before rates reach any significant level."

Other bright spots in the market Thursday included Japan's central bank becoming more bullish about its economy and hopes of stimulus from China's central bank. Economic releases before the market open indicated a rise in unemployment claims as well as a drop in import prices.

AMD was the top performer on the S&P 500 after Canaccord Genuity upgraded the semiconductor producer to buy from hold on advantages in the manufacturing of game consoles. Shares surged 11.8% to $4.45.

Celgene was another top gainer, jumping more than 7.5% to $134.90 after reporting positive results Thursday from a large phase III study seeking to establish the company's multiple myeloma drug as the preferred treatment for newly diagnosed patients.

Microsoft rose 2.8% to $35.68. The company has issued a reorganization letter highlighting that Microsoft's groups will be working closer together, and some major executives will be shifting roles, and in some cases, departing. The company is going to shift more toward combining software and hardware together.