* Internet shares among day's gainers; Google hits new high
* More top hedge funds dropped Apple shares in first quarter
* Credit Suisse fear barometer falls to one-year low
* Dow up 0.4 pct, S&P 500 up 0.5 pct, Nasdaq up 0.3 pct
By Angela Moon
NEW YORK, May 15 (Reuters) - U.S. stocks rose on Wednesday, with the Dow and S&P 500 hitting new all-time highs in a broad market rally as the recent upward momentum persisted.
The Nasdaq also hit its highest level since November 2000 although gains were limited by a steep decline in Apple . Shares of the tech giant sold off in late afternoon trading after filings from hedge funds showed that the one-time Wall Street darling was dropped by more famous hedge fund managers in the first quarter.
But shares of Apple's rival Google shot up to a new record high at $916.38 on news that it has adopted a streaming music business model. Google closed at $915.89, up 3.3 percent.
The day's gains were broad, with nine of the S&P 500's 10 sectors ending higher. Among the top gainers were the consumer staples sector index, up 1 percent, and the financial sector, also up 1 percent. The only decliner was the energy sector index, down 0.4 percent.
The overall market showed further signs of strength despite the S&P 500 rising to a record for the fourth session in a row. The broad market index has recorded 15 new closing highs this year.
An options gauge looking at the level of anxiety showed signs that investors are placing optimistic wagers on the stock market, positioning for the current run-up to extend for the next three months.
Equities have rallied in recent weeks as investors bet that central bank stimulus measures will keep supporting market gains.
Such policies have helped spur advances of about 15 percent in major U.S. indexes this year despite data showing some signs of lackluster growth.
In the latest reads on the economy, activity in New York state's manufacturing sector unexpectedly contracted in May. Another report showed that U.S. industrial production fell more than expected in April.
"It's disconcerting that the data was so much lower than what we were looking for, but there's no reason for investors to sell," said Michael Binger, senior portfolio manager at Gradient Investments in Minneapolis.
"The main things driving the market - the Fed, earnings, consumer confidence - are holding up, and people put money in the market on any down day. I still see a lot of value."
The Dow Jones industrial average rose 60.44 points, or 0.40 percent, to close at a record 15,275.69. The Standard & Poor's 500 Index added 8.44 points, or 0.51 percent, to finish at a record 1,658.78. The Nasdaq Composite Index gained 9.01 points, or 0.26 percent, to close at 3,471.62.
During the session, the Dow touched an all-time intraday high at 15,301.34, while the S&P 500 reached a record intraday peak at 1,661.49. Earlier, the Nasdaq had hit a fresh 52-week high at 3,475.48.
Cisco Systems Inc shares rose 6.5 percent to $22.59 in extended-hours trading after the company posted a higher-than-expected quarterly profit, suggesting that the network equipment maker's customers are spending more on technology. The stock ended the regular session at $21.21, down 0.3 percent.
In signs that the rally may strengthen from the current levels, the Credit Suisse Fear Barometer, known as the CSFB Index, fell 11.4 points over the past two weeks - the largest decline on record - and is now at a one-year low of 21.73.
"A low CSFB reading is a constructive signal for the market," Credit Suisse equity derivatives strategist Mandy Xu wrote in a note to clients.
The indicator essentially tracks the willingness of investors to pay for downside protection with zero-premium so-called collar trades that expire in three months, using S&P 500 index options.
Agilent Tech was one of the S&P 500's top percentage gainers, up 3.9 percent to $45.68, a day after the company posted adjusted earnings that beat expectations and doubled its stock-buyback program to $1 billion.
Tech shares also got a lift from Netflix Inc, up 4 percent at $243.40, and Yahoo Inc, up 2.6 percent at $27.34. In contrast, Computer Sciences Corp was the S&P 500's biggest loser, dropping 9.7 percent to $44.71 after reporting results.
Shares of Bristol-Myers Squibb rose 5.1 percent to $44.34 in anticipation of favorable data from clinical trials of its melanoma drug. Limited data is expected to be released this evening ahead of the annual meeting of the American Society for Clinical Oncology, which begins on May 31.
In other data released on Wednesday, the U.S. Producer Price Index recorded its largest drop in three years in April, falling a seasonally adjusted 0.7 percent.
Volume was roughly 6.6 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT, above the average daily closing volume of about 6.3 billion this year.
Advancers outnumbered decliners on the NYSE by a ratio of 8 to 7, while on the Nasdaq, about 14 stocks rose for every 11 that fell.