Wall Street climbs to record high

Wall Street rose to a record after better-than-expected economic data and corporate earnings fuelled investors' optimism the US economy is gathering steam as Federal Reserve Chairman Ben Bernanke reiterated the central bank's ongoing support for growth.

Bernanke testified before Congress for a second day, now to the Senate Banking Committee. He has finally managed to reassure investors that the Fed's stimulus will not vanish, saying there is no "preset course" for its US$85 billion a month bond-buying program.

"The market gets the idea the tapering is coming, the economy is improving and rates are still going to be low for a time," Rick Fier, director of equity trading at Conifer Securities in New York, told Bloomberg News.

Meanwhile, the latest economic reports surpassed forecasts. Initial claims for state unemployment benefits fell by 24,000 to a seasonally adjusted 334,000 last week, according to the Labor Department. That was a larger drop than economists had anticipated.

Separately, the Philadelphia Federal Reserve Bank's index of business activity index rose to 19.8 last month from 12.5 in June, comfortably beating economists' expectations.

The latest US earnings also showed strength. Shares of Morgan Stanley gained, last up 4.8 per cent, on better-than-expected earnings and plans to buy back US$500 million in stock.

"Morgan Stanley has been a turnaround story and I think this buyback is an indication that they're at the next phase of their development," Kenneth Leon, analyst with S&P Capital IQ, told Reuters.

Shares of International Business Machines Corp also rose, last up 2 per cent, as the company lifted its full-year earnings forecast. UnitedHealth also beat earnings expectations, boosting its shares 6.8 per cent.

In late afternoon trading in New York, the Dow Jones Industrial Average rose 0.56 per cent, the Standard & Poor's 500 Index advanced 0.53 per cent, while the Nasdaq Composite Index gained 0.11 per cent. The S&P 500 earlier touched a record 1,693.12, while the Dow reached a record 15,589.40.

"The initial jobless claims were better than expected. Earnings are coming in OK. All in all it's hard not to be bullish on the market here," Fier said.

Shares of Dell rose 1.9 per cent. The company postponed a shareholder vote on its chief executive's US$24.4 billion buyout offer to Wednesday after failing to get enough support, according to Reuters.

"The delayed vote may speak to the Silver Lake/Dell transaction not finding necessary support," Topeka Capital Markets analyst Brian White told Reuters. "A higher bid may be necessary to consummate this transaction."

In Europe, the benchmark Stoxx 600 Index gained 0.9 per cent. The UK's FTSE 100 Index and Germany's DAX both rose 1 per cent, while France's CAC 40 added 1.4 per cent.