Dow hits record high

NEW YORK (CNNMoney.com) -- A broad stock rally Thursday sent the Dow Jones industrial average to its highest close ever and the Nasdaq composite to its highest point in nearly six years.

The Dow Jones industrial average (up 72.82 to 12,514.98, Charts) added 0.6 percent and closed at a record high, narrowly taking out the previous record high of 12,510.27 from Dec. 27 of last year.

Special Reportfull coverage

America's cheapest gas is in this town Summer drivers to get a break on gas Why gas prices are likely to keep climbing You'll pay a little less for gas this summer Expect relief from record February gas prices Why gas prices are rising

The Nasdaq (up 25.52 to 2,484.85, Charts) composite added 1 percent and ended at its highest point since Feb. 2001.

The broader S&P 500 (up 8.97 to 1,423.82, Charts) index added more than 0.6 percent, and closed just short of a more than six-year high.

Oil prices slumped nearly 4 percent, firing up a stock rally. The positive momentum enabled investors to shrug off any concerns about rising bond yields and a surprise interest rate hike from the Bank of England.

Oil prices continued to slide Thursday, as they have since the start of the year, in response to warm Northeast weather and easing supply shortage fears.

U.S. light crude oil for February delivery fell $2.14 to settle at $51.88 a barrel on the New York Mercantile Exchange.

"I think the market likes the idea that generally speaking, energy prices are down," said Robert Philips, president and chief investment officer at Walnut Asset Management.

In addition, some of the money that's coming out of oil and other commodities is going into tech and pharmaceuticals, Philips said. "You're seeing a rotational move."

Oil and gas prices have been slumping since the start of the year. A decline in energy prices helps reduce inflationary pressures on the economy and puts more money back in the hands of consumers.

But the steady decline and subsequent selloff in commodity stocks - such as oil services, silver and metals - had raised worries about global growth.

A "stabilization" in some of those areas Thursday - plus the morning's upbeat jobless claims report - helped reassure investors about the strength of the economy, said James Awad, president at Awad Asset Management.

In addition, many of the factors that have lifted stocks over the last six months remain in place, including: a sense that the economy is slowing, but not heading for a recession; moderating oil prices; bets that the Federal Reserve will cut interest rates later in the year; and earnings growth that is strong (albeit slower than in recent quarters).

Although there will be periods over the next few months when worries about these factors drive stocks lower, in general, "the critical issues driving stocks higher remain in place," Awad added.

In addition to the recent decline in oil prices, another good sign for the economy Thursday was the weekly jobless claims report, which fell to the lowest level since July.

On the downside, investors on both sides of the Atlantic were thrown for a loop after the Bank of England opted to boost its benchmark lending rate by a quarter-percentage point due to pricing pressures. The move surprised economists who thought the bankers would hold steady for the time being.

The next Federal Reserve policy meeting is not until the end of January and economists expect the central bank to hold steady.

Treasury prices slumped, boosting the yield on the benchmark 10-year note to 4.73 percent from 4.68 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar gained versus the yen and euro.

Although the fourth-quarter earnings reporting period doesn't heat up until later in the month, a few companies released results.

Late Wednesday, Genentech (up $3.66 to $87.40, Charts) reported quarterly sales and earnings that rose from a year ago and topped estimates. The biotech also issued a 2007 earnings growth projection that is more than analysts are currently forecasting. Shares gained Thursday.

eBay (up $0.93 to $30.23, Charts) rose on news that it's buying online ticket broker StubHub for $310 million.

Other big tech gainers included Intel (up $0.40 to $21.92, Charts), Microsoft (up $1.04 to $30.70, Charts), Yahoo! (up $0.50 to $29.20, Charts) and Qualcomm (up $0.93 to $39.48, Charts).

However, gains were broad-based, with most S&P sectors rising.

Blue-chip gains were also decisive, with 25 out of 30 Dow stocks rising. In addition to Intel and Microsoft, other Dow gainers included Honeywell (up $0.75 to $45.71, Charts), United Technologies (up $1.01 to $63.70, Charts), DuPont (up $0.66 to $48.92, Charts) and Walt Disney (up $0.50 to $34.99, Charts).

In other news, Cisco Systems (up $0.01 to $28.69, Charts) is suing Apple (down $1.20 to $95.80, Charts) for trademark infringement over the name of its new device iPhone. (Full story).

Market breadth was positive. On the New York Stock Exchange, winners topped losers by roughly 12 to 5 on volume of 1.67 billion shares. On the Nasdaq, advancers topped decliners by nearly two to one on volume of 2.4 billion shares.

10 big ideas for 2007

Danger ahead on Wall Street?

Private Equity in 2007

More on the markets