Stocks snapped a three-day losing streak Thursdayas a trio of encouraging economic reports — the Philadelphia Federal Reserve's manufacturing report, leading indicators and weekly jobless claims — fueled recovery hopes.
The Dow Jones Industrial Average gained nearly 60 points, or 0.7 percent, while the S&P 500 advanced 0.8 percent.
But tech stocks retreated, tipping the Nasdaq into negative territory.
Right now we're in a transitional phase in the market," Matt McCormick from Bahl & Gaynor Investment Counsel, said on CNBC. "The rally we're seeing is a relief rally based upon the massive monetary and fiscal stimuli ... I think it's somewhat of a sugar high because eventually, the market has to come down to earth and earnings and earnings growth."
But for today, the morning's economic reports were just what the market needed to break its losing streak.
First up was the weekly jobless-claims report, which showed initial claims nudged higher to 608,000 but continuing claims, which more broadly reflect job trends, dropped for the first time since January.
Then it was the Philadelphia Fed, which reported its index of manufacturing conditions in the region improved to minus-2.2in June from minus-22.6 in May, the best reading since September 2008 when the index was in positive territory and far better than the minus-17 economists had expected.
Meanwhile, leading indicators rose for a second straight month, climbing 1.2 percent in May after a revised 1.1-percent gain in April, the Conference Board reported. The May gain was the largest since a 1.4-percent increase in March 2004.
And mortgage rates started to pull back, with the 30-year dropping 0.21 percentage points to an average 5.38 percent, after the uptick in mortgage rates started to put a damper on new home-buying activity.
"The recession is losing steam," Ken Goldstein, an economist for the Conference Board said in a statement. "Confidence is rebuilding and financial market volatility is abating."
But some market pros pointed out that second-quarter earnings will be the true test of this rally's staying power.
The other thing the market was buzzing about today was the bond auction: The Treasury announced a record $104 billion worth of bond auctions— two-, five- and seven-year — for next week.
Today's session was the mirror image of Wednesday's: Tech and consumer stocks were lower, after gaining in the prior session. And banks rebounded after Wednesday's slide.
Treasury Secretary Tim Geithner was on Capitol Hill today, trying to sell President Obama's financial-reform plan to the Senate. But lawmakers were skeptical, worrying that the Federal Reserve would become some sort of super-regulator.
Geithner's testimony before the House Financial-Services Committee, originally slated for 1:30 pm ET today, was postponed.
Financials rebounded after the prior session's slide after Standard & Poor's downgraded its credit rating on 18 banks in the sector, including Wells Fargo , and lowered its outlook on another four. including PNC Financial .
The regulatory reform is expected to impact more than banks, extending to companies like CNBC parent General Electric .
Discover Financial Services rose 4 percent after the credit-card provider reported its loss narrowed and the flood of bad loans started to recede.
Lincoln National rose 6.9 percent after Credit Suisse upgraded the stock to "outperform" from "neutral."
Research In Motion skidded ahead of earnings from the BlackBerry maker, due out after the closing bell. The company beat earnings forecasts but its outlook was a disappointment.
Shares of iPhone maker Apple rose amid speculation that Apple's iPhone may be chipping away at the BlackBerry's business market share.
Chip stocks were among the biggest tech decliners, with Intel off 1.7 percent and AMD off 5.6 percent.
Microsoft and Google had a war of words over a new Google software, the Wall Street Journal reported.
Perhaps the most surprising news of the day was that struggling imported-goods retailer Pier 1 posted a profit. Its shares jumped 1 percent.
Shares of movie studio Lions Gate jumped 7.9 percent after investor Carl Icahn upped his stake in the company to 16.9 percent.
Still to Come:
FRIDAY: Quadruple witching
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