The sector itself was slightly higher, with the SPDR Healthcare Select ETF edging up and improving with the broader market.
Elsewhere, Monsanto slipped after the world's biggest seed maker said its forecast for fiscal 2010 earnings were below estimates and announced plans to make deeper work force cutsthan previously announced, saying it will reduce its staff by about 8 percent to cut costs.
Initial claims for unemployment insurancefell more than expectedto a seasonally adjusted 550,000 from an upwardly revised 576,000 in the previous week. Analysts expected claims to drop to 560,000, according to Thomson Reuters.
The initial reaction to the 30-year bond auction was muted but picked up as trading continued.
Analysts have been bedeviled by the rise in stocks and drop in bond yields despite September's reputation as the worst for the market, and the political and economic headwinds confronting the markets.
"The market tried to fool the majority of the people the majority of the time," Mike Holland, of Holland and Co., said on CNBC. "What's going on now is something that's very reminiscent of the 1970s markets when the backdrop politically and economically was really ugly and the stocks actually did very well."
Weakness in the financial sector had been limiting gains, but the market rallied as the SPDR Financial Select ETF, which tracks the movements of larger companies in the group, turned positive.Walt Disney page90DISfalsetrue43pricetruefalsefalsefalse0QuotefalsetrueChartfalsetrueNewsfalsetrueProfilefalsetrueAdd to Watchlistfalsetruetruehttp://api-cdn.cnbc.com/api/chart/chart.aspGE4true3, Time Warner page90TWXfalsetrue43pricetruefalsefalsefalse0QuotefalsetrueChartfalsetrueNewsfalsetrueProfilefalsetrueAdd to Watchlistfalsetruetruehttp://api-cdn.cnbc.com/api/chart/chart.aspGE4true3 and CBS page90CBSfalsetrue43pricetruefalsefalsefalse0QuotefalsetrueChartfalsetrueNewsfalsetrueProfilefalsetrueAdd to Watchlistfalsetruetruehttp://api-cdn.cnbc.com/api/chart/chart.aspGE4true3 were among major media companies that surged after Goldman Sachs raised the U.S. entertainment sector to "attractive" from "neutral," citing a stronger-than-expected rebound in national advertising.Disney was the top gainer on the Dow 30 while Kraft Foods page90KFTfalsetrue43pricetruefalsefalsefalse0QuotefalsetrueChartfalsetrueNewsfalsetrueProfilefalsetrueAdd to Watchlistfalsetruetruehttp://api-cdn.cnbc.com/api/chart/chart.aspGE4true3 was the weakest performer on the bluechip index as shares continued to sag following its failed buyout offer of Cadburypage90CBYfalsetrue43pricetruefalsefalsefalse0QuotefalsetrueChartfalsetrueNewsfalsetrueProfilefalsetrueAdd to Watchlistfalsetruetruehttp://api-cdn.cnbc.com/api/chart/chart.aspGE4true3.Additionally, UALpage90UAUAfalsetrue43pricetruefalsefalsefalse0QuotefalsetrueChartfalsetrueNewsfalsetrueProfilefalsetrueAdd to Watchlistfalsetruetruehttp://api-cdn.cnbc.com/api/chart/chart.aspGE4true3 and U.S. Airwayspage90LCCfalsetrue43pricetruefalsefalsefalse0QuotefalsetrueChartfalsetrueNewsfalsetrueProfilefalsetrueAdd to Watchlistfalsetruetruehttp://api-cdn.cnbc.com/api/chart/chart.aspGE4true3 jumped after JPMorgan upgraded both airline companies to "overweight" from "neutral" and wrote that fundamentals for the sector were on the mend. right/CNBC/Sections/News_And_Analysis/_Specials/TheCrisis_OneYearLater/_IMAGES/TheCrisis_1YL_badge.jpg12006000righttruehttp://msnbcmedia.msn.comThe Crisis: 1 Year Later - A CNBC Special Report - See Complete Coverage false1PfalsefalsefalsefalseThe Crisis: 1 Year Later - A CNBC Special Report - See Complete CoverageBut the optimism was offset by Merckpage90MRKfalsetrue43pricetruefalsefalsefalse0QuotefalsetrueChartfalsetrueNewsfalsetrueProfilefalsetrueAdd to Watchlistfalsetruetruehttp://api-cdn.cnbc.com/api/chart/chart.aspGE4true3, which dropped slightly after the drugmaker said it is abandoning an experimental drugto treat acute migraines because the drug caused elevated liver enzyme levels in some cases.
In the meantime, Chevron rose after the oil giant sealed an estimated $60 billion worth of gas deals with three North Asian buyers for its massive Gorgon project in Australia, paving the way for a final investment decision in coming weeks.
Texas Instruments will continue to be in the spotlight after the chip producer raised its revenue and earnings guidance in its mid-quarter update after the bell on Wednesday, expecting to ride a gradual recovery in the global semiconductor industry.
Crude oil settled near $72 a barrel, up 63 cents, following data that showed a wider-than-expected fall in crude stockpiles last week. Inventories fell 5.9 million barrels for the week ended Sept. 4, compared to the previous week, according to the EIA, greater than the 1.5-million-barrel draw expected by analysts surveyed by Reuters.
Market breadth was strongly positive, with gainers beating losers more than 3 to 1. Volume was a bit stronger than recently but still fairly weak, with just under 1.5 billion shares changing hands on the New York Stock Exchange.
STILL TO COME:
THURSDAY: Atlanta Fed Pres Lockhart Speak at 12:30 pm EDT; Fed governor Kohn participates in a panel discussion at 4:15 pm; Fed releases its latest balance sheet information at 4:30 pm.
FRIDAY: Import and Export Prices; Consumer Sentiment; Wholesale Trade; and Earnings from Campbell Soup.