Wall Street was already climbing in mid-afternoon when the Fed released minutes of the Federal Open Market Committee's March 27-28 meeting that showed most of the panel's members "thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy."

But the release of the minutes was just what an interest rate-weary market wanted to hear. The Fed has raised rates 15 times in a row since June 2004, putting the nation's benchmark rate at 4.75 percent.

"When it appears as though the governors of the Federal Reserve believe that the end of the rate increases is near, that's very good news for investors," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors in Albany, N.Y. "A lack of ambiguity from the Federal Reserve is always a little bit of a shocker."

The Dow Jones industrial average gained 194.99, or 1.76 percent, to 11,268.77.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 22.32, or 1.74 percent, to 1,307.65, and the Nasdaq composite index rose 44.98, or 1.95 percent, to 2,356.14.

Traders had already gotten some comfort from the Labor Department's report that core wholesale inflation, which excludes volatile energy and food prices, rose just 0.1 percent last month. Overall inflation rose 0.5 percent, the fastest pace in three months, after a 1.4 percent drop in February. However, the core number indicated that the effects of higher oil are not making their way throughout the economy.

Any sign of rising inflation has sent stock prices falling, as fighting inflation has been the Fed's primary concern. However, while the economy has been expanding, inflation has been under control.

With some reassurance from the Fed, investors are likely to focus more on earnings, which are cascading in this week and next. If company results show they've managed to weather higher prices for energy and other commodities, Wall Street could have the incentive to continue a rally started in March but put on hold in recent weeks.

At the same time, the Fed minutes showed policy makers are not giving up their inflation watch.

"Members also recognized that in current circumstances, checking upside risks to inflation was important to sustaining good economic performance," the minutes stated.

The threat of inflation was evident today in the continued surge of energy prices. The rise, caused by increasing tension over Iran's nuclear energy program and worries about disruption to supplies from Nigeria, pushed crude to a record close of $71.35 on the New York Mercantile Exchange.

But stock investors, calmed by past experience, appeared to be looking past the price of crude, analysts said.

"We have seen it before and that's the key. It's not a new level and we didn't really see demand taper off, we didn't really see economic activity slow down because of it," said Steven Goldman, chief market strategist, Weeden & Co. in Greenwich, Conn. "A year ago we thought $70 would be the death knell for consumers. It wasn't."

Energy stocks rose on oil prices. Shares of Exxon Mobil Corp. rose $1.49, or 2.4 percent, to $63.54. Valero Energy Corp. gained $1.80, or 2.7 percent, to trade at $67.45.

Other gainers included Merrill Lynch & Co. Inc., which reported sharply lower first-quarter earnings but still beat analyst estimates. Merrill rose 92 cents, or 1.2 percent, to $79.38.

Johnson & Johnson also rose, up 48 cents to $58.13, after the health products company reported a 17 percent increase in first-quarter profits, just beating estimates.

IBM Corp. added $1.67, or 2.1 percent, to close at $83.31. Shortly after the bell, the company announced quarterly results that topped expectations. In after hours trading, it's shares declined 32 cents to $82.99.

Yahoo Inc. also closed higher, up 33 cents, or 1.1 percent, at $31.30. The company reported quarterly earnings that matched expectations shortly after the market closed. In after-hours trading, its shares rose $1.65 to $32.95.

Advancing issues outnumbered decliners by a nearly 4-to-1 ratio on the New York Stock Exchange, where preliminary consolidated volume came to 2.63 billion shares, up from 1.82 billion in the previous session.

The Russell 2000 index of smaller companies was up 20.34, or 2.7 percent, to 769.81.

Overseas, Japan's Nikkei stock average rose 1.4 percent. Britain's FTSE 100 gained 0.2 percent, Germany's DAX index fell 0.3 percent, and France's CAC-40 declined 0.1 percent.