Last week's hint by the US central bank at an end to its interest rate-hiking cycle, followed by data showing a softer labour market, has provided traders with some much-needed confidence as a tough year draws to a close, with some even talking of a cut in the new year.
However, after a healthy run-up across global markets, some have run out of steam as the possibility of more tightening casts a shadow owing to stubbornly high inflation.
Comments from Fed decision-makers ramming home their determination to slay prices have also kept the euphoria in check, with many keeping their options open for another rate hike if needed.
Earlier this week, Minneapolis Fed chief Neel Kashkari insisted on seeing more data before deciding whether more work was needed, while Chicago boss Austan Goolsbee played his cards close to his chest, saying only that inflation was "the number-one thing".
Thursday sees Fed Chair Jerome Powell appear on a panel to talk about monetary policy challenges, while Atlanta chief Raphael Bostic and his Richmond counterpart Tom Barkin are due to speak elsewhere.
"The market is currently digesting the influx of comments from Federal Reserve officials, and the strength of recent gains may eventually be tested if there are stronger indications, particularly from... moderates, that Fed members want to put the 2024 rate cut Genie back in the bottle," said Stephen Innes at SPI Asset Management.
That, he added, "could potentially dampen investor enthusiasm into year-end".
"Of course, it all comes down to the data, and if we maintain that not-too-hot or not-too-cool environment, stocks could gradually increase."
Hopes that rates have peaked and could come down next year provided support to US stocks, as did another drop in 10-year Treasury yields, while the VIX index -- or so-called fear gauge -- fell to its lowest level since September.
The S&P 500 chalked up an eighth successive gain, the best streak since November 2021, while the Nasdaq was also higher, though the Dow edged slightly lower.
Asian markets largely followed suit, with Tokyo, Sydney, Seoul, Singapore, Wellington, Jakarta and Manila all in the green.
Shanghai and Hong Kong swung between gains and losses after data showed China slipped back into deflation last month, reinforcing the need for more economic support. Taipei fell.
Oil prices enjoyed a small bounce but made little impact on the losses of nearly seven percent seen in the previous two days caused by demand worries and easing fears over the Middle East crisis.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: UP 0.9 percent at 32,454.92 (break)
Hong Kong - Hang Seng Index: DOWN 0.3 percent at 17,515.65
Shanghai - Composite: FLAT at 3,052.72
Dollar/yen: DOWN at 150.88 yen from 151.00 yen on Wednesday
Euro/dollar: UP at $1.0715 from $1.0711
Pound/dollar: UP at $1.2290 from $1.2286
Euro/pound: UP at 87.19 pence from 87.16 pence
West Texas Intermediate: UP 0.5 percent at $75.72 per barrel
Brent North Sea crude: UP 0.5 percent at $79.92 per barrel
New York - Dow: DOWN 0.1 percent at 34,112.80 (close)
London - FTSE 100: DOWN 0.1 percent at 7,401.72 (close)
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