Investors started buying early in the day, after the Federal Reserve's minutes showed that most members think asset purchases should continue through at least mid-2013.
"People still think that we will have QE in perpetuity," said Douglas DiPietro, head of trading at Evercore.
Don't fight the Fed: The minutes, which were released five hours early, showed that central bankers remain divided over whether quantitative easing should be continued longer-term. But that didn't appear to worry investors.
The Nasdaq jumped 1.8%.
Several analysts and traders said that Wednesday's surge came mostly from investors not wanting to miss any more legs of the rally. Outside of the Fed minutes, there was no clear catalyst for the surge.
"The path of least resistance is to push the market higher," said DiPietro.
Investors also liked trade figures out of China for March that showed a 10% year-over-year increase, buoyed primarily by exports to the United States.
Also Wednesday, President Obama unveiled his 2014 budget proposal, which serves as an important marker in continuing debt negotiations in Washington.
What's moving: In company news, shares of Family Dollar (Fortune 500) erased earlier losses to close up 1%, despite an earnings miss and weak outlook. ,
Better-than-expected results from computer networking company Adtran ( helped push up other networking companies, including )Cisco (Fortune 500) and , Alcatel-Lucent (. )
Shares of First Solar ( pulled back after a big surge Tuesday following better-than-expected )guidance from the solar panel maker.
Home builder Taylor Morrison ( jumped 5% in its public debut, after the initial public offering priced at the high end of its range. )
Bitcoin bubble bursting? The price of a Bitcoin, the virtual currency craze that many speculated was a bubble, dropped as much 60% Wednesday. After hitting a high of $266 earlier in the day, Bitcoin fell as low as $105.
In the world of real paper currencies, the dollar and euro were up against the Japanese yen but fell against the British pound.
Oil prices rose, while gold prices slumped nearly 2%.
The yield on the 10-year Treasury rose to 1.81% from 1.75% Tuesday.
|Fears grow over China property flameout|
|Oklahoma bans local minimum wage increases|
|How Zuck met Oculus: Facebook's big bet on virtual reality|
|Detroit to auction vacant homes online. Starting bid: $1,000|
|China GDP slows to 7.4% in first quarter|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.26%||4.48%|
|15 yr fixed||3.30%||3.31%|
|30 yr refi||4.25%||4.45%|
|15 yr refi||3.29%||3.34%|
Today's featured rates: