The Dow closed at 11,866.69, surpassing the record of 11,850.61 set yesterday. The blue chip index traded up to 11,870.06, which stands as its trading high.

Rising oil prices didn't smother investors' good mood.

"Considering the distance we've come over the last three months and certainly the last three days, it's interesting we could have a data point like oil's climb and not have the market backup much," said Arthur Hogan, chief market analyst at Jefferies & Co. "It's certainly a scenario where the longer term prospects for the market are looking more positive."

Stocks pulled back briefly after Charles Plosser, the newly installed president of the Federal Reserve Bank of Philadelphia, signaled that further Fed interest rate hikes may be in the best interests of the economy's long-term performance.

The Dow rose 16.08, or 0.14 percent. The blue chips have gained 196.34 over the past three sessions; on Tuesday, the index shattered closing and trading highs that had stood since Jan. 24, 2000, toward the end of the dot-com boom.

Broader stock indicators were also higher today. The S&P 500 index rose 3.00, or 0.22 percent, to 1,353.22, and the Nasdaq composite index rose 15.39, or 0.67 percent, to 2,306.34.

Advancing issues led decliners by roughly 2 to 1 on the New York Stock Exchange.

Bonds fell as stocks wavered, with the yield on the 10-year Treasury note at 4.61 percent, up from 4.56 percent yesterday. The U.S. dollar was mostly higher against other major currencies. Gold prices rose.

Crude oil futures rose. A barrel of light crude settled at $60.03, up 62 cents in trading on the New York Mercantile Exchange.

The day's economic news was stronger than expected, with retailers such as Target Corp., Nordstrom Inc. and Limited Brands Inc. reporting their same-store sales in September surpassed analysts forecasts. Also, the number of new unemployment claims dropped to its lowest level in 10 weeks.

Still, just where stocks are in their long recovery from their 2002-03 lows remains a topic of debate on Wall Street.

Some traders have questioned the depth of the rally, saying technical markers such as the ratio of advancers to decliners are weaker than they've hoped. And while the Dow has recovered, the S&P 500 still remains more than 11 percent off its all-time high.

Other traders say the market's biggest fears — high energy prices and additional rate hikes by the Federal Reserve — are behind it, leaving room for a greater run-up in stock prices.

Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors, said he sees this as a stock market in the more advanced stages of a recovery that has been driven, in large part, by declining energy prices.

In company news, Wyeth fell 28 cents to $50.90 after a Philadelphia jury awarded a woman $1.5 million after finding that the drug company's hormone replacement drug was a factor in her breast cancer. This is the second such case against the company to go to trial; Wyeth won the first.

Wal-Mart Stores Inc. dropped $1.14 to $48.41 after the world's largest retailer reported disappointing September sales. Rival discounter Target Corp. rose $1.05 to $58.68 after it reported a solid sales gain for the month and beat analyst estimates.

Nordstrom Inc. rose 25 cents to $45.44 and Limited Brands Inc. dropped 12 cents to $27.87.

Marriott International Inc., the world's largest hotel company by revenue, said its third-quarter earnings weakened, falling 5.4 percent. But its 33 cents per share net income beat estimates of 30 cents and the stock rose $2.52 to $40.85.

Class A Shares of Berkshire Hathaway Inc., Warren Buffett's investment company, crossed $100,000 a share for the first time today, before retreating slightly. The shares closed up $1,301.00 at $99,000.

The Russell 2000 index of smaller companies rose 9.61, or 1.31 percent, to 743.08.

Volume on the New York Stock Exchange was 1.73 billion shares, compared with 1.86 billion at the same point yesterday.