Countrywide Financial, the largest U.S. mortgage lender, and Fannie Mae , the nation's biggest source of mortgage finance, were among the session's advancers.
Shares of American International Group , the world's largest insurer by market value, led the major gainers in the Dow and the S&P 500, a day after it said its exposure to the housing and credit crisis was manageable.
Among banks, shares of JPMorgan Chase, the No. 3 U.S. bank, gained 2.6 percent.
Builders also got a boost from Toll Brothers after the largest U.S. luxury home builder reported a smaller-than-expected loss. Shares of home builder Lennar, the No. 2 U.S. home builder, jumped 14.2 percent.
On the Nasdaq, shares of Apple led gainers, with a rise of 2 percent after two brokerages raised their price targets for the iPod maker's stock.
Retail Troubles Weigh on Market
Target said Thursday that if recent soft sales trends continued, its December same-store sales would fall short of its previous forecast. Earnings were mixed elsewhere in retail, though several companies reversed earlier losses and were on the plus side in afternoon trading.
Motorola also was among stocks helping to move the market, as the cellular phone company said a breakup remains on the table. At the same time, the company reaffirmed its fourth-quarter earnings forecast, sending shares up.
Among the biggest gainers of the day were the Nasdaq's Hoku Scientific , which surged after getting $185 million in financing from Merrill Lynch. On the losing side, electronic payment solutions firm Verifone shares continued to take a beating after Moody's placed it on notice for a possible downgrade. The company's stock has lost more than half its value since Nov. 30.
Elsewhere, MBIA, the largest bond insurer in the world, said Thursday it is looking at ways to shore up its capital base, a day after rating agency Moody's Investors Service said the insurer was "somewhat likely" to require additional capital.
And Delta Financial was the latest casualty of the subprime collapse, as the lightly traded lender announced it probably will have to file bankruptcy. The Long Island, N.Y.-based company earlier had fired most of its 1,395 employees, and shares lost almost all their value Thursday.