Dow ends at record on Fed chief's view and earnings

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks rallied on Wednesday, sending the Dow Jones industrial average to a record close, as investors were relieved by Federal Reserve Chairman Ben Bernanke's comments that inflation is poised to ease while the economy grows moderately.

It was a broad-based rally, with conglomerates such as General Electric Co. (GE.N) and Honeywell International Inc. (HON.N) among the biggest gainers. The stock market also got a lift from stronger-than-expected earnings from companies, including Applied Materials Inc. (AMAT.O).

The Fed chief's message in testimony to Congress eased worries that the U.S. central bank might raise interest rates in an effort to control inflation in the near term. Traders said Bernanke's comments increased hopes that the Fed may cut rates later in the year, which could help enhance corporate profits.

"This was a very sanguine comment on inflation, and that was very encouraging," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York. "It says to me that the Fed is not likely to change interest rates any time soon."

Shares of rate-sensitive stocks rose, including American Express Co. (AXP.N) and JPMorgan Chase & Co. (JPM.N).

The Dow Jones industrial average .DJI rose 87.01 points, or 0.69 percent, to end at a record 12,741.86, its 28th since the beginning of October.

The Standard & Poor's 500 index .SPX advanced 11.04 points, or 0.76 percent, to finish at 1,455.30. The Nasdaq Composite Index .IXIC gained 28.50 points, or 1.16 percent, to close at 2,488.38.

The blue-chip Dow average rose as high as 12,759.40, an intraday record, while the S&P 500 climbed to 1,457.65 -- its highest since September 2000.