Bernanke, speaking to the National Association for Business Economics, said accommodative monetary policy would support demand and, over time, drive down long-term unemployment.
His comments underscored views easy monetary policy would remain in place for some time and fanned expectations for more quantitative easing. Previous rounds of Fed asset purchases have weakened the dollar and boosted U.S. and global stocks.
Gains in U.S. equities pushed the S&P 500 to a more than 12 percent gain so far this year, leaving it on track for its best quarter since 2009. The advance has been fuelled by months of better-than expected U.S. economic data as investor focus shifts away from the euro zone debt crisis.
"There's optimism that monetary accommodation is alive both here and in Europe, and so long as that is the case markets can continue to have a positive tone," said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York.
"With things getting better, but also continued accommodation, that's a very comfortable tone for the market."
In afternoon trading in New York, the Dow Jones industrial average added 117.84 points, or 0.90 percent, to 13,198.57. The S&P 500 Index gained 13.04 points, or 0.93 percent, to 1,410.15. The Nasdaq Composite rose 37.37 points, or 1.22 percent, to 3,105.29.
The S&P 500, near its highest level since May 2008, is also on track to close its fourth straight month of gains.
Global equities as measured by MSCI rose 0.8 percent, the largest jump in the index in two weeks.
The pan-European FTSEurofirst 300 index ended up 0.89 percent. U.S. dollar denominated Nikkei futures gained 0.8 percent.
The euro hit its highest level against the greenback in more than three weeks. The U.S. currency slid to a more than three-week low against the Swiss franc.
The euro rose as high as $1.3339, its highest level since March 1, according to Reuters data. Against the Swiss franc, the dollar dipped as low as 0.9030, its lowest since March 1.
Disappointing U.S. home sales data reinforced bets on an extended easing stance from the Fed. Contracts to purchase previously owned homes unexpectedly fell in February.
"All this left the market with the nagging thought that the Fed is not quite done with economic stimulus," said Boris Schlossberg, director of FX Research at GFT in Jersey City, New Jersey. "I think they have not in any way, shape or form eliminated that possibility."
Monday's rally notwithstanding, sentiment toward the euro remained cautious as investors worried about the euro zone's troubled economy.
Gold prices rose 1.3 percent on Bernanke's comments, as the dollar weakened and the Fed chairman's dovish stance reminded investors about the threat of inflation.
Germany could allow two euro zone rescue funds to operate together in an effort to strengthen the region's tools against its debt crisis, in a move that further helped revive investor appetite for growth-oriented assets.
The bloc's finance ministers meet later this week.
U.S. government debt prices snapped a four-day winning streak as fewer worries about Europe reduced bids for lower-risk Treasuries.
The benchmark 10-year U.S. Treasury note was down 5/32, with the yield at 2.2515 percent.
Also supporting risk assets, German business sentiment rose unexpectedly for the fifth month in a row in March, signalling that Europe's largest economy is more resilient than others tied to the euro zone debt crisis.
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