U.S. stocks rose on Thursday as a post-election rally resumed, while investors digested a slew of economic data and the Federal Reserve's decision to raise interest rates.

"It appears that this rally has more room to run and the Fed rate hike can not stop this. The US home builders data has confirmed that the housing market is strong and it echoes what Janet Yellen said last night. All eyes are pinned towards that 20K mark for the Dow and bulls are once again in charge of the market," Naeem Aslam, chief market analyst at Think Markets, told CNBC in an email.

"This is despite the fact that we are seeing some carnage in the currency market especially if you look at the dollar against the Euro. The pair has made another low against the dollar which we have not seen since 2003," Aslam said.

That said, Robert Pavlik, chief market strategist at Boston Private Wealth, said the market might be starting to show signs of exhaustion. "I think, however, we're still in a long-term bull market; in the short term, I think we're a bit over-extended," he said.

The Dow Jones industrial average closed about 60 points higher, having risen more than 150 points earlier, with Goldman Sachs contributing the most gains. At one point, the Dow was about 50 points away from hitting the 20,000 mark. The S&P 500 gained 0.4 percent, with financials rising around 1 percent to lead advancers. The Nasdaq composite also advanced 0.4 percent.

The U.S. central bank increased rates for just the second time in a decade on Wednesday, as was widely expected. The Fed, however, also projected three rate hikes for next year, with most market participants expecting a forecast of two increases.



Since then, the dollar index has rallied sharply, trading 1.34 percent higher at 103.12 on Thursday, hitting a 14-year high. The euro, meanwhile, fell 0.54 percent to $1.0414.

Dollar index (Oct. 2002-Now)

Source: FactSet

Treasury yields have also spiked sharply, with the benchmark 10-year note yield hovering around 2.6 percent, while the traded around 1.26 percent.

"You've seen the two-year note rise about 10 basis points from yesterday, said Matt Toms, chief investment officer of fixed income and Voya Investment Management. "That's showing the market is baking in a potential third rate hike next year."

Stocks, however, sold off following the Fed's announcement on Wednesday, with the Dow falling more than 100 points, while the Russell 2000 falling 1.27 percent. U.S. equities have experienced a sharp rally since Donald Trump's presidential election win, with the major U.S. indexes hitting all-time highs.

"You were looking at a market that was looking for a reason to sell off," said Art Hogan, chief market strategist at Wunderlich Securities. "Beyond the Fed, there is no macro roadblock through the end of the year. Flip the calendar over, then you have a few things, including the fact that January has been sloppy for the past two years."

Optimism surrounding some of the president-elect's proposed policies — including deregulation of certain sectors and tax cuts — have flooded the market since Nov. 8, propelling the market higher.

Hogan also noted the market has been lifted, in part, by a massive sector rotation. "In the first three quarters of the year, you could pull up the leadership list and it would look the same, with the difference being the order of magnitude," he said. "Now, you could be in the top 5 and the bottom five within the same day. That's people trying to adjust to the changing environment in real time."