Gains began late Wednesday after Fed Chairman Ben Bernanke said the economy still needs "highly accommodative monetary policy for the foreseeable future."
U.S. stock futures took off, then triggered gains in both Asia and Europe. Mr. Bernanke's comments also prompted a selloff in the dollar, a decline in Treasury yields and a rally in gold prices.
The Dow climbed 149 points, or 1%, to 15443 in the minutes after Thursday's opening bell, putting it pace to top its all-time closing high of 15409.39, hit on May 28.
Mr. Bernanke's statement reassured investors who in recent weeks were grappling with the question of when, and how dramatically, the Fed is likely to change policy, particularly a "tapering" of its $85 billion a month bond-buying program.
"What we got from Bernanke was the dawning realization among investors that tapering is not tightening," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. "It doesn't matter how many different people say it, the words had to come from the Fed chief himself: just because the Fed might reduce the number of bonds it buys, that's not the same as lifting interest rates."
The Standard & Poor's 500-stock index gained 16 points, or 1%, to 1669 and the Nasdaq Composite Index rose 37 points, or 1.1%, to 3558.
Wednesday's release of the minutes from the Fed's latest policy meeting left stocks mostly unchanged in regular trading hours. But Mr. Bernanke sparked market moves after the close, saying in a question-and-answer session that followed a speech that the Fed wasn't likely to raise short-term rates for some time after the unemployment rate falls to 6.5%.
"The minutes showed that more Fed members were willing to taper this year, but Bernanke said we're in no hurry," said Sam Stovall, chief equity strategist at S&P Capital IQ. "Now Wall Street is saying, 'let's scrap September, and look to December for the start of tapering.'"
The dollar, which has cranked higher since May as markets have braced for an early withdrawal of stimulus, pulled back sharply in response. The yield on the 10-year Treasury note was down to 2.594% from 2.683% on Wednesday. Gold prices gained 2.9% to $1,283 a troy ounce. Benchmark U.S. crude-oil prices retreated from a 15-month high, falling 1.1% to $105.35 a barrel.
Gains in the U.S. followed those on exchanges overseas. In Europe, the Stoxx Europe 600 up 0.6%. Germany's DAX 30 tacked on 1.1%.
In Asia, the Shanghai Composite rose 3.2% amid expectations some measures to stabilize the country's growth may be introduced. Thursday's gains followed a 2.2% jump on Wednesday.
Elsewhere, Japan's Nikkei Stock Average edged up 0.4% after the Bank of Japan left its policy unchanged, but upgraded its assessment of the economy by saying it was starting to recover moderately.
Two economic data points showed a lukewarm labor market and low inflation. Initial jobless claims increased by 16,000 to a seasonally adjusted 360,000 last week, more than the 335,000 new applications forecast by economists.
Separately, prices for goods imported into the U.S. fell for the fourth straight month in June, a sign of weak overseas demand putting downward pressure on U.S. inflation.
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