Record-shattering day on Wall Street

NEW YORK (CNNMoney.com) -- Stocks rallied across the board Wednesday, pushing the Dow Jones industrial average to a new all-time record, after investors cheered comments from Federal Reserve Chairman Ben Bernanke.

The Dow (up 87.01 to 12,741.86, Charts) jumped 0.7 percent to close at a record high, taking out its previous record from two weeks ago. The blue-chip barometer also hit a record trading high during the session.

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The Dow's transportation and utilities averages notched new record highs as well, making it the first time since March 17, 1998, that all three averages hit records on the same day.

The broader S&P (up 11.04 to 1,455.30, Charts) index gained 0.8 percent and ended at its highest point since September 2000. The tech-fueled Nasdaq (up 28.50 to 2,488.38, Charts) composite added 1.2 percent.

Blue chips led a big rally Tuesday amid takeover talk about Alcoa, a rebound in commodity stocks and an upgrade of GM.

The tone was positive again Wednesday morning as investors digested the start of Bernanke's two-day semiannual report to Congress on the economy and monetary policy.

In his prepared comments, the Fed chief said that "so far, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation."

However, he also reiterated what the central bankers wrote in the statement that accompanied the last Fed meeting, that the main risk to current policy is that inflation doesn't ease as expected, at which point the Fed will be prepared to "take action."

"His talk today was very positive," said Harry Clark, chief executive of Clark Capital Management.

Investors reacted positively to the Fed's inflation outlook, he said, which indicated that inflation was "pretty much contained."

All three major gauges extended their gains after Bernanke's comments.

A big sell-off in oil prices following a mixed weekly inventory report and a slide in Treasury bond yields on the Bernanke comments gave stocks additional support.

Investors also responded well to the morning's January retail sales report, which showed a smaller than expected rise in both overall sales and sales excluding autos. The milder economic reading seemed to temper recent worries that stronger than hoped for economic growth could cause the Fed to start raising rates again this year.

The Fed has held rates steady since last summer after raising them for two years in a bid to keep the economy from overheating and to ward off inflation.

Up ahead, investors will be playing close attention to reports on January's housing starts and PPI due out Friday.

In corporate news, Applied Materials (up $0.70 to $18.89, Charts) reported quarterly earnings late Wednesday of 29 cents a share, up sharply from a year ago and above forecasts. The company also reported higher sales that missed estimates.

But investors focused on the chip gear maker's strong earnings and positive forecast, sending shares up 4 percent.

A variety of large technology shares jumped, too, including Microsoft (up $0.37 to $29.40, Charts), Yahoo! (up $1.10 to $30.66, Charts), eBay (up $0.62 to $33.47, Charts) and Intel (up $0.24 to $21.14, Charts).

Banking stocks also got a boost after Bernanke's testimony. Goldman Sachs (up $4.87 to $217.40, Charts), Morgan Stanley (up $1.11 to $82.36, Charts) and JP Morgan Chase (up $0.47 to $51.42, Charts) all rose more than 1 percent.

DaimlerChrysler (up $5.33 to $69.78, Charts) unit Chrysler Group said it will cut 13,000 jobs through 2009 as it tries to staunch big losses. Shares of DaimlerChrysler soared 8 percent.

After the closing bell, Applebee's (up $0.52 to $26.84, Charts) posted lower quarterly earnings, sending shares slipping downward in extended trading.

Shares of Baidu Inc. (Charts) also fell after hours, although the search engine said fourth-quarter profits rose.

And clothing and accessories maker Guess Inc. (down $0.36 to $74.58, Charts) posted a significant rise in quarterly earnings, sending shares up 4 percent on Inet.

Market breadth was positive. On the New York Stock Exchange, winners trounced losers 7 to 4 on volume of 1.5 billion shares. On the Nasdaq, advancers topped decliners 9 to 7 as 2.2 billion shares changed hands.

U.S. light crude oil for March delivery slumped $1.06 to $58 a barrel on the New York Mercantile Exchange after a mixed weekly inventory report.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.73 percent from 4.81 percent late Tuesday. Treasury prices and yields move in opposite directions.

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

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