Stocks extended their winning streak for a third straight session Thursday, helped by a late round of buying in consumer staples and materials. Bank and tech stocks remained the day's weakest links.
The Dow Jones Industrial Average rose 120.71, or 1.2 percent, to close at 10,138.99, putting it on track for its best week in over a year. The S&P 500 gained 0.9 percent, while the and Nasdaqadvanced 0.7 percent.
All of the Dow components finished higher, except for Intel , which lost about 0.2 percent, as chip stocks retreated after logging their best day in weeks on Wednesday.
The top three Dow gainers were DuPont , McDonald's, and American Express .
The day's economic news offered some encouragement: The Labor Department said the number of people filing for state unemployment benefits fell by 21,000 to 454,000 last week, 6,000 fewer than expected.
Financials, which were Wednesday's top sector, weakened Thursday after analyst Meredith Whitney lowered her earnings forecast for Goldman Sachs , citing market volatility and European exposure.
Sun Bancorp shares soared 37 percent following news that billionaire investor Wilbur Ross is taking a 25 percent stakein the New Jersey bank.
State Street sharesretreated after leading the sector's rally on Wednesday after the bankgave an upbeat outlook.
U.S. retailers reported chain-store sales this morning, with several beating expectations, helped by the warm weather and timing of the Memorial Day holiday.
JC Penney , Nordstrom , Limited and Abercrombie were among those that beat expectations, while Costco and Gap was among those that fell short.
Overall, sales are expected to have risen 3.2 percent in June.
Boeing shares rose 2.3 percent following news of two acquisitions — privately held Narus, a software company that helps protect large Internet protocol networks from being attacked by hackers, and Argon, an engineering firm that makes surveillance and combat equipment.
Merck advanced 1.2 percent following news that the company will close eight research and eight manufacturing sitesfollowing its merger with Schering-Plough.
Walt Disney shares rose following news that construction magnate Ron Tutor and investment firm Colony Capital are close to a deal to buy Disney's Miramax movie unit for up to $700 million in cash. Separately, Disney lost a $270 million judgment in a suit involving the British company that created the popular TV show "Who Wants To Be A Millionaire."
European shares were higher after both the Bank of England and the European Central Bank kept their key lending rates unchanged, as expected.
Also in Europe, the bank stress tests remain in focus with details of the methodology limited.
The IMF raised its global growth forecast for 2010 thanks to expansion in Asia and higher U.S. private demand, but warned that the European debt crisis poses a significant recovery risk. The IMF now says 2010 growth will be 4.6 percent from its prior 4.2 percent forecast, but it left its 2011 view unchanged at 4.3 percent.
BP shares rose 1.7 percent after the head of rival Royal Dutch Shell said BP has some attractive assets. BP also tried to dampen expectationsabout plugging the leaking Gulf oil well early.
Volume was light, with about 1.2 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 9 to 2.