Federal Reserve Chairman Ben Bernanke's signal that monetary policy will remain loose gave stocks another lift Wednesday, paving the way for many indexes to advance to new record highs.

Following a run of upbeat U.S. economic news, largely related to housing and jobs, there had been talk in the markets that the Fed may soon put a brake on its super-easy monetary policy, which has boosted liquidity in financial markets over the past few years.

The Fed is currently making $85 billion in bond purchases every month to encourage lending and spur the U.S. economic recovery. Though a number of economic indicators have improved, the U.S. economy isn't posting historically high growth rates and unemployment is relatively high above 7 percent despite consistent falls in recent months.

Though Bernanke said that keeping interest rates low for a long time can unbalance the financial system, he warned that a change in policy now would "carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further."

Following his comments to lawmakers in Congress, European and U.S. stock markets pushed sharply higher while the dollar lost some of its shine.

"The upshot for equities intraday is the next green light," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. "Investors have driven the market much higher in 2013 and for want of a better catalyst will use the excuse of a persistent Fed stance to buy again."