Stocks leapt to multi-year highs and recorded one of their biggest gains of the year Monday after Federal Reserve Chairman Ben Bernanke suggested that the economy still needs help to produce faster job growth.
The Dow Jones industrial average climbed 160.90 points to 13,241.63, its third-best showing this year. The Standard & Poor's 500 index rose 19.40 points to 1,416.51, its highest close since May 2008.
The Nasdaq composite index, which is closing in on a 20 percent rally for the year, climbed 54.65 points to 3,122.57, its best finish since November 2000.
Health care stocks led the market on a day when the Supreme Court began hearing arguments on the constitutionality of President Barack Obama's 2010 health care law, which will require Americans to carry insurance or pay a penalty.
If the court upholds the law, the insurance companies stand to gain 30 million customers. But the full impact is hard to judge. The industry also ran ads against the overhaul after deciding it would not bring them enough healthy patients to balance higher costs.
Health care stocks gained 1.7 percent as a group Monday, beating the S&P's 1.4 percent gain. Aetna rose 3.1 percent, WellPoint 2.9 percent and UnitedHealth Group 2.7 percent. The court is expected to decide the case in June.
Bernanke, speaking to a group of economists, sounded pessimistic about jobs even though the country has added an average of 245,000 jobs each month since December and the unemployment rate has fallen steadily since last summer.
He noted that the number of people working and the hours they work are well below where they stood before the 2008 financial crisis. He also suggested that some of the decline in the rate was because discouraged workers gave up looking for work.
Bernanke's comments could mean two things for the market, both good for stocks.
_ They could suggest that he believes the Fed needs to continue to prop up the economy _ by keeping short-term interest rates near zero and perhaps by buying more bonds later.
The Fed has embarked on two previous rounds of bond-buying, most recently in August 2010. The idea is to drive down long-term interest rates and encourage investors to buy stocks. The second round ignited a 28 percent stock rally in eight months.
"He didn't say anything new. It's just the fact that he said it," said Chip Cobb, senior vice president of Bryn Mawr Trust Asset Management in Pennsylvania. "Now we're looking for more stimulus again. It's like we can't get enough."
_ Bernanke said that some recent hiring is merely companies making up for laying off too many people in 2009, rather than a sign of a growing economy. That could be a relief to investors who were worried that labor costs would grow too quickly and shrink earnings, said Paul Zemsky, head of asset allocation at ING Investment Management in New York.
Some of the jump in stocks could also be because money managers are piling into stocks before the first quarter ends this week. Fund managers who missed out on this quarter's rally will want to show clients they are invested for the next quarter.
"It may not be a wise investment decision, but I think it happens," said Brian Lazorishak, portfolio manager at Chase Investment Counsel in Charlottesville, Va.
Stocks mostly rose in Europe. Germany's DAX index climbed 1.2 percent after a measure of business confidence in that country rose for the fifth month in a row. France's CAC-40 rose 0.7 percent, and in London, the FTSE rose 0.8 percent.
The euro gained less than a penny against the dollar, to $1.335. Gold rose $23.20 to $1,685.60 an ounce.
The yield on the 10-year Treasury note rose to 2.25 percent from 2.23 percent late Friday. Rising yields are a sign that investors are willing to take money out of safer government bonds and put it into riskier investments like stocks.
The price of crude oil settled at $107.03, up 16 cents, and the average price of gasoline hit $3.90 per gallon. Last year's peak was $3.98 but that was set in May, when the summer driving season begins and prices usually rise.
Among stocks making moves Monday:
_ Lions Gate Entertainment climbed 4.5 percent after its movie "The Hunger Games" had a record-setting opening weekend.
_ Select Comfort Corp., which makes Sleep Number beds, climbed 3.3 percent after KeyBanc reiterated its "buy" rating on the stock and said shipments across the mattress industry were up in February.
_ American Express climbed 2.5 percent after announcing that it will raise its quarterly dividend to 20 cents from 18 cents. It is the company's first dividend increase since November 2007.
_ Tenet Healthcare rose 5.5 percent after the hedge fund Glenview Capital Management disclosed that it has taken a 5.5 percent stake in the company. That makes it Tenet's fifth-largest shareholder.
_ Safeway, the grocery chain, fell 3.4 percent, worst in the S&P 500, after a Credit Suisse analyst downgraded his rating on the company. The analyst said a pension liability could cause its costs to rise.