U.S. stocks notched their best day in nearly four weeks on Wednesday as investors welcomed new hints pointing to a Federal Reserve interest rate hike in coming weeks. Traders were also encouraged by more corporate deal news.
The rally pushed the Standard & Poor's 500 index back into positive territory for the year.
ConAgra Foods jumped 4 percent on news the company is spinning off its frozen potatoes business. Railroad operator Norfolk Southern rose 6 percent after receiving an unsolicited takeover offer by Canadian Pacific.
Stocks in financial companies, which tend to benefit from rising interest rates, were among the biggest gainers after traders digested the minutes from the Fed's October policy meeting. The minutes show officials believed the economy could improve enough to justify a rate hike at the central bank's meeting next month.
"The market today is just reinforcing the view that most likely the Fed is going to move in December, and that's not necessarily a bad thing for either the economy" or the stock market, said Jeremy Zirin, chief equities strategist at UBS Wealth Management Americas.
The Dow Jones industrial average rose 247.66 points, or 1.4 percent, to 17,737.16. The Standard & Poor's 500 index gained 33.14 points, or 1.6 percent, to 2,083.58. That's the S&P 500's best gain since Oct. 22. The Nasdaq composite added 89.19 points, or 1.8 percent, to 5,075.20.
The Fed meeting minutes revealed Fed officials believed the U.S. job market would improve further and inflation would begin to move toward their 2 percent annual target by the time the group meets next month. They also took note of the U.S. economy's resilience through a summer of financial market turbulence and felt that global threats had "diminished."
The Fed has kept its benchmark for short-term rates near zero since late 2008. A string of rate hikes can eventually weigh on stock markets, but investors have mostly become prepared for the Fed to act next month and don't anticipate that an initial rate hike will derail the bull market.
Major stock indexes headed higher as trading got going early Wednesday and maintained the momentum throughout the day.
The government's latest tally of U.S. home construction didn't slow down the rally, despite delivering news that builders broke ground on fewer houses and apartments in October.
Investors began bidding up shares in ConAgra and Norfolk Southern early on. ConAgra added $1.57 to $40.93, while Norfolk Southern rose $5.52 to $92.49.
All 10 sectors in the S&P 500 rose, led by health care stocks, which rose 2 percent. The sector is up 5.1 percent this year. Financial stocks rose 1.8 percent. The sector is down 0.8 percent for the year. Among individual bank stocks, JPMorgan Chase gained $1.32, or 2 percent, to $67.45 and Bank of America climbed 42 cents, or 2.4 percent, to $17.84.
Not all stocks had a good day.
Target slumped 4.3 percent after the retailer reported that its sales at established locations increased in the third quarter at a slower rate than in the previous quarter. The stock shed $3.13 to $69.78.
Citrix Systems slid 10 percent on news that the computing company will slash about 1,000 jobs and spin off its GoTo business into a separate company as it seeks to cut costs. The stock fell $7.88 to $70.54.