Stocks rose to session highs Thursday afternoon after the 30-year Treasury auction was met with satisfactory demand and banks gained.
Telecoms, consumer discretionary and financials were among the best performers. Utilities, health care and consumer staples were among the weakest links.
The Dow rose about 30 points, led by American Express , Microsoft and McDonald's .
Treasury prices pared their losses slightly after the latest 30-year auction. The $13 billion sale fetched a high yield of 4.770 percent and the bid-to-cover ratio was 2.73.
That follows strong demand during Wednesday's sale of 10-year notes.
Stocks had a weak start after initial claims for state unemployment benefits rose by 18,000last week, the Labor Department reported. Economists had expected a small drop in claims.
The Dow has been trading near the 11,000 target for the last few weeks, leaving some investors to question when it will actually surpass the benchmark. Wait until next week when first-quarter earnings will set the stage for positive tailwind, said Jack Ablin, CIO of Harris Private Bank.
“There’s more room to run — we have positive momentum and favorable backdrop,” said Ablin. “We could see another 10 to 15 percent from here and likely peak in late second, early third quarter.”
He expects good earnings reports from sectors such as financials, industrials, consumer discretionary and basic materials.
First-quarter earnings season unofficially kicks off next week with Alcoa reporting results after the bell on Monday.
Stocks sold off on Wednesday after Federal Reserve Chairman Ben Bernanke that the economy is "not out of the woods" yet and Kansas City Fed President Thomas Hoenig said "The time is right to put the market on noticethat it must again manage its risk" — not rely on the Fed to do so.
Many market pros said traders were simply using the Fed comments as an excuse to sell an already overbought market. But today's jobless-claims report was more worrisome.
"Even after recent declines, the level of [jobless] claims is higher than one would expect it to be if private nonfarm payrolls were really poised to begin sustained gains," Joshua Shapiro, an economist at MFR, wrote in a note to clients.
Oil prices fellbelow $85 a barrel, declining for a second day. The dollar fellagainst the euro after ECB president Jean-Claude Trichet said Greece was not in danger of defaulting on its debt and gold prices remained flatnear $1,151 an ounce.
Homebuilders slipped as mortage rates rose to their highest level in eight months last week, with the 30-year fixed at 5.21 percent.
Meanwhile, former Citigroup executives Charles Prince and Robert Rubin, expressed regrets before the Financial Crisis Inquiry Commission said they do not take responsibility for Citi’s woes or its $45-billion taxpayer bailout.
Congress is proposing regulatory reforms for banks that are seen as "too big to fail" but Prince denied that Citi was either "too big to fail" or "too big to manage."
Airline stocks soared across the board after news late Wednesday that United Airlines and U.S. Airways are in merger talks. Acrross the pond, Spain's Iberia and the UK's British Airways announced a definitive merger agreement.
Apple shares slipped despite the debut today of iPhone software that allows multitaskingand Palm dropped despite takeover rumors.
Microsoft rose after the tech giant announced plans to debut new technology for home entertainment at next week's National Association of Broadcasters convention.
Meanwhile, eBay fell after Kaufman Bros. downgraded the online auction firm to "hold" from "buy."
The nation's major chain stores delivered encouraging results for March: Same-store sales jumped 9.1 percent, the highest increase on record. Economists had expected a more modest 6.3-percent increase.
The results were helped by weak year-earlier comparisons and an early Easter. But the outlook was also encouraging: Kohl's and teen chain Aeropostale both raised their forecasts.
Most retail stocks were lower, with sharp losses in JCPenney and Abercrombie & Fitch. Among the notable advancers were Gap and Target.
Pier 1, a retailer many had left for dead, is back: The stock is up over 6 percent today after the imported home-goods retailer reported same-store sales jumped 19 percent last month as margins improved amid strong pricing.
Bed Bath & Beyond shares rose after brokerage Thomas Weisel raised the retailer's price target to $48 from $43. The firm reported earnings that beat Wall Street estimates and raised guidance for its fiscal year after the bell Wednesday.
Peabody Energy fell as the company, which wants to buy Australia's Macarthur Coal, but has been rebuffed, is now asking Australian regulators to intervene to prevent Macarthur from buying a smaller local rival.
And, for a second straight day it's a Fed-a-palooza: Minneapolis Fed President Narayana Kocherlakota will appear before the Minneapolis Chamber of Commerce at 2:45 pm. Fed Vice Chairman Donald Kohn will speak at a San Francisco Fed event at 4 pm.
Plus, interim earnings results from Chevron are due after the bell.
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