US STOCKS-Dow, S&P finish at records after soothing Fed

(Updates to close)

By Caroline Valetkevitch

NEW YORK, Oct 9 (Reuters) - The Dow and S&P 500 jumped to close at records on Tuesday after minutes from the Federal Reserve's last meeting showed inflation expectations were contained, leaving open the question of whether another rate cut is near.

With the start of earnings season this week, optimism that results would beat what many analysts consider to be low expectations for the quarter also helped bolster stocks.

Alcoa Inc (AA.N), the aluminum company and Dow component, was to kick off the earnings reporting period by announcing results after the close. Its stock closed up 3.7 percent at $39.72.

Shares of investment banks, which benefit from lower borrowing costs, rose, with the Amex Securities Broker Dealer index .XBD up 1.8 percent.

"The conclusion that the markets reached is that the Fed probably has a bias not toward raising rates, but probably toward lowering rates," said Mark Coffelt, chief investment officer of Empiric Funds in Austin, Texas.

The Dow Jones industrial average .DJI climbed 120.80 points, or 0.86 percent, to end at 14,164.53 -- a record. The Standard & Poor's 500 Index .SPX ended up 12.57 points, or 0.81 percent, at a record 1,565.15. The Nasdaq Composite Index .IXIC finished up 16.54 points, or 0.59 percent, at 2,803.91.

During the session, the Dow reached an intraday record high of 14,166.97 and the S&P hit and all-time high of 1,565.26. The Nasdaq climbed to 2,806.41, its highest level since January 2001.