A surge in biotechnology shares lifted the Nasdaq Composite Index to a record, a day after the Federal Reserve signaled it would move more slowly on raising interest rates.
Stocks rose across the board on Thursday, with the Nasdaq climbing 1.3% and the Dow Jones Industrial Average and the S&P 500 each adding 1%.
Much of the buying focused on highflying shares such as biotechnology companies that seek to develop cutting-edge drugs, a sector that includes many untested companies with little revenue or profit.
On Wednesday, the central bank, which has repeatedly indicated caution on the pace of coming rate rises, suggested it would take an even more measured approach to rate increases. The prospect of lower rates tends to buoy shares of companies that are viewed by investors as all-or-nothing bets, by pushing down returns on fixed-income investments and other alternatives.
The Fed statement "was read positively" by investors, said Brian Fenske, head of sales trading at broker ITG. "It just seems bullish, lower rates for longer."
The Nasdaq Biotechnology Index rose 2.9% and is up 24% this year. Low interest rates "makes them more attractive lottery tickets to own," said Michael Ball, portfolio manager at Weatherstone Capital Management, which oversees $ 725 million in Denver. Mr. Ball said he has been a longtime owner of health-care stocks, including biotechnology shares.
BioMarin Pharmaceutical soared $ 15.06, or 12%, to $ 138.66. Celgene jumped 4.76, or 4.2%, to 116.92, and Gilead Sciences gained 2.33, or 2%, to 121.21.
Stocks began the session with sharp gains on the back of busy trading. Investors received upbeat economic data on inflation and the labor market, which are taken into consideration by the Fed as it decides when to raise interest rates. The consumer-price index rose 0.4% in May from a month earlier, the biggest gain since February 2013, the Labor Department said. Jobless claims fell 12,000, to 267,000, in the week ended June 13. Economists had expected 276,000 new claims.
Around midday, the Nasdaq touched an intraday high of 5143.32, lifting the index above its intraday record of 5132.52 last seen on the eve of the dot-com crash on March 10, 2000.
The Nasdaq's high clears one of the last of the bubble-era hurdles for the index. While both the Dow and S&P 500 have notched dozens of records in recent years, the Nasdaq has taken longer. In April, the index set a closing record for the first time since 2000.
The technology-oriented Nasdaq gained 68.07 points, to 5132.95, its first record close since late May.
The Dow gained 180.10 points, to 18115.84. The S&P 500 index added 20.80 points, to 2121.24. Both indexes remain shy of records last reached in late May. For the year, the Dow is up 1.6% and the S&P 3%, while the Nasdaq has gained 8.4%.
Uncertainty over the path of U.S. interest rates have kept stocks in a tight range in recent weeks. Investors also have voiced concerns about uneven pace of economic growth and elevated stock-market valuations.
Still, relatively low interest rates and a pickup in spending as consumers benefit from lower gas prices could boost earnings growth and propel the market higher, said Chris Gaffney, president of EverBank World Markets.
"It's a good environment for stock investors still, even though we're pretty lofty at these levels," Mr. Gaffney said.
In corporate news, Oracle sank 2.17, or 4.8%, to 42.74, after the hardware and software maker reported late Wednesday a larger-than-expected sales decline and missed profit forecasts for its May 31 fiscal quarter.
Kroger rose 63 cents, or 0.9%, to 73.54, after the supermarket chain posted better-than-expected earnings in the first quarter and lifted a key sales target for the year.
Fitbit soared 9.68, or 48%, to 29.68, in its debut, after the maker of wearable fitness-tracking devices priced its initial public offering at $ 20 share, above expectations.
European stocks rallied even though a meeting of eurozone finance ministers ended without a deal on Greece's bailout. Germany's DAX index gained 1.1%, while France's CAC-40 rose 0.3%.
In commodity markets, gold climbed 2.1%, to $ 1,201.50 a troy ounce. Crude oil advanced 0.9%, to $ 60.45 a barrel.
The yield on the 10-year Treasury note rose to 2.352% from 2.306% on Wednesday. Bond yields rise as prices fall.
—Saumya Vaishampayan contributed to this article.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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