Stocks pared their gains Thursday after a disappointing 30-year auction.
The Treasury sold $13 billion of 30-year bonds at a high yield of 4.52 percent; the bid-to-cover ratio was 2.45.
The Dow gave back about 20 points after the auction news.
Stocks have been higher all day, following encouraging reports on jobless claims and the trade deficit. Budding optimism about the recovery made consumer-discretionary stocks the day's best performer. Disney led the Dow.
The Labor Department said the number of newly laid-off workers seeking jobless benefits rose by 17,000last week but the four-week moving average, which smooths out weekly fluctuations, dropped by 7,750 to 473,750 — its lowest level since September 2008.
"After five straight weekly declines, a correction in these noisy data was bound to happen sooner or later; the week after Thanksgiving, with its huge seasonal adjustment factor, was always a good candidate," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.
The jobless-claims report is the latest evidence that the recovery will be bumpy, which means the Federal Reserve will likely keep interest rates low for some time.
A separate report showed the trade deficit shrank 7.6 percent in October to $32.9 billion. Economists had expected the gap to widen to about $36.8 billion.
Low interest rates and the resulting decline in the dollar have encouraged investors to buy stocks and commodities.
The dollar fell against euro. Oil climbed above $71 a barrel, while gold rebounded to near $1,130 an ounce.
Consumer-discretionary stocks were the best performer among 10 key S&P sector indexes, up 1.5 percent.
Disney was the biggest gainer on the Dow after CEO Bob Iger said the advertising market is improving, with ABC's fourth-quarter advertising up about 25 percent in the fourth quarter from the spring, though the recovery remains shaky.
This echoed similar comments from other media execs in recent days, including CBS CEO Les Moonves, News Corp. COO Chase Carey and Viacom CEO Philippe Dauman.
AOL shares fell on their debut on the New York Stock Exchange, as the Internet unit's spinoff from Time Warner became official this week. Time Warner shares jumped.
CIT Group shares jumped after the small-business lender emerged from bankruptcy.
Citigroup shares rose after the bank said it wants to repay TARP money by raising capital in an equity offering.
Bank of America , which already announced plans to repay its TARP loan, saw its shares fall.
There was a lot of buzz about Goldman Sachs , which announced plans to pay bonuses in stock, which can't be touched for five years, instead of cash.
General Electric shares rose after the conglomerate won a $1.4 billion contract from Caithness Energy to provide wind turbines for what will be the world's largest wind farm, Shepherds Flat, in Oregon.
Apple shares rose following news that the company plans to overhaul its iTunes software to allow users to buy and listen to anywhere using a Web browser, not just on the computer they downloaded it to.
Research In Motion shares continued to benefit from traders' bet on the BlackBerry maker's growth in China.
United Technologies advanced after JPMorgan raised its price target on the stock to $74 from $70.
The Treasury will hold yet another auction today, selling $13 billion in 30-year bonds. The results, as usual, will be available shortly after 1 pm. Tuesday's 3-year Note auction saw strong demand, while Wednesday's sale of 10-year Notes was on the weak side.
At 1:45 pm, Fed Governor Elizabeth Duke is scheduled to speak at a Chicago Fed conference.
Costco, the largest warehouse retailer, is already out with its quarterly numbers, earning 60 cents a share for its first quarter, one cent ahead of analyst estimates. Later on, networking equipment maker Ciena will report.
Other stocks to watch today could include Cadbury, as the Wall Street Journal reports that Hershey is nearing a decision on whether to make a bid for Cadbury, which has consistently rejected overtures by Kraft Foods.