Volume was very light on the last full trading day before Christmas. The stock market will be open for a half session tomorrow, closed on Thursday for Christmas and then will reopen for a half session Friday.

"The bottom line is the market has been creeping higher pretty much every day," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "It’s a continuation of the rally, based on optimism for next year."

"People want to be fully invested coming into year’s end ... it’s hard to believe we’ll have a major move down for the rest of the year," he added.

The Dow Jones industrial average closed up 3.26, or 0.03 percent, at 10,341.26, following a five-day gain of 315 points. The blue chip average is now trading at its highest level since May 17, 2002, when the Dow closed at 10,353.08.

The broader market also finished higher. The Nasdaq composite index gained 18.98, or 1 percent, to 1,974.78.

And the Standard & Poor’s 500 index rose 3.08, or 0.3 percent, to 1,096.02. It was the highest level since May 23, 2002, when the index closed at 1,097.08.

The Commerce Department reported today that the nation’s gross domestic product grew at an 8.2 percent annual rate in the third quarter, the best showing since 1983. The latest reading was identical to the preliminary estimate made a month ago.

In a separate report, the department said consumer spending rose by 0.4 percent in November while incomes rose 0.5 percent, the best gain since May. The income reading was slightly above Wall Street’s expectations, but consumer spending was slightly below.

Meanwhile, the University of Michigan said its consumer sentiment gauge moved to 92.6 in December, down slightly from November’s figure of 93.7, according to Dow Jones Newswires. Still, December’s reading was higher than analysts’ forecasts.

The stock market typically sees strong gains at the end of December as investors put year-end bonuses and dividends to work.

This year, however, might be different because stocks already have seen a large runup since March.

In addition, terrorism concerns also weigh on the market, particularly after the federal government on Sunday raised the terror alert level and said al-Qaida might attack during the holiday season, analysts said.

"It’s almost now being accepted as a given that the macro-economy is on a very solid footing," said Bill Meade, managing director at RBC Capital Markets. "What you’re looking at is a Christmas rally that wants to happen."

"But given the fact that we keep seeing quotes from folks like (Defense Secretary) Donald Rumsfeld reminding us that we’re on an elevated terror alert, ... it leaves doubt and uncertainty as to whether the Christmas rally will transpire," he said.