Stocks snapped a two-day losing streak Thursday after retailers delivered their best sales numbers in a decade, reinvigorating confidence in the recovery.
Telecoms, consumer discretionary and financials were among the best performers. Utilities, health care and consumer staples were among the weakest links.
The Dow rose 29.55, or 0.3 percent, to close at 10,927.07. American Express , Microsoft and McDonald's were at the top of the leader board.
Several retailers even raised their forecasts, including Kohl's and teen chain Aeropostale.
Among the notable advancers were Gap and Target. A few retailers finished lower, including JCPenney and Abercrombie & Fitch.
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.
Though, some analysts started ratcheting down their April retail-sales forecasts, worried that the March gains would come at the expense of April's sales.
The 30-year Treasury auction was encouraging: The $13 billion sale was met with solid demand, fetching a high yield of 4.770 and a bid-to-cover ratio of 2.73. That follows strong demand during Wednesday's sale of 10-year notes.
Stocks had a weak start after a report showed initial claims for state unemployment benefits rose by 18,000last week. 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.
Bank stocks advanced, with Citigroup and PNC Financial both up more than 2 percent. JPMorgan was up about 1 percent.
Former Citigroup executives Charles Prince and Robert Rubin were on Capitol Hill today. The pair expressed regrets before the Financial Crisis Inquiry Commission but said they don't 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."
Oil prices fellfor a second day, settling below $85 a barrel. 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 ended mixed as mortage rates rose to their highest level in eight months last week, with the 30-year fixed at 5.21 percent.
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 multitasking, while Palm rose amid 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."
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.
Volume was light, with just 8.48 billion shares changing hands on the three major exchanges, more than than a billion less than usual. Advancers outpaced decliners, roughly 8 to 7.
Interim earnings results from Chevron are due after the bell.
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