Stocks rose Thursday after encouraging readings on jobless claims and the trade deficit. Financials led the way, while McDonald's capped gains on the Dow.
The Dow Jones Industrial Average was up more than 50 points, or 0.5 percent, after rising half a percent in the previous session.
European stocks managed to inch up, with mining firms pulling the major indexes into the green. Asian stocks ended mostly higher, but Chinese indexes saw significant declines.
First-time claims for unemployment benefits dropped by 27,000 last week to 451,000. Economists had expected a more modest drop to 470,000.
The trade deficit narrowed more than expected in July as exports hit their highest level since August 2008.
"The recovery is not falling apart and continued growth is the most likely outcome," Zach Pandl, an economist at Nomura Securities International, told Reuters.
Still to come: The Federal Reserve will release details of its balance sheet, which will give a snapshot of the central bank's lending to the financial system.
Financials were the early leaders, with both Bank ofAmerica and Goldman Sachs higher.
Goldman was fined $27 million by the UK's Financial Services Authority for not notifying British authorities of an investigation in the U.S.
Several banks also got a boost after Rochdale analyst Dick Bove issued a list of big bank takeover targets. Among them were Susquehana , KeyCorp and Fifth Third .
Industrials were mixed, with Alcoa up, and Boeing down.
McDonald's was the biggest decliner on the Dow after the fast-food chain reported its same-store sales rose 4.6 percentin August but fell short of analyst expectations amid soft sales in Europe.
Apple shares rose after the company said it will publish guidelines to determine which programs can be sold in its App Store.
And Google jumped after the company launched "Google Instant," a tool aimed at speeding up search results.
Nat Semi rose ahead of earnings from the chip maker, due out after the bell today.
BP shares rose after the company issued a report spreading the blame around for the Gulf oil spill and as Fitch upgraded its debt rating on the company by three notches to A, citing "an end to the threat of further leaks from the Macondo well."
Sony was up following news that the entertainment giant will create several animated series based on Marvel characters, including Iron Man, X-Men and Blade. Marvel is a unit of Disney .
Men's Warehouse shares advanced after the retailer said its profit rose 7.7 percent amid higher sales and improved margins.
Elsewhere in the retail sector, Toys 'R Us unwrapped plans to vastly expand its reach this Christmas by adding 600 "pop-up" stores, more than 260 Toy 'R Us shops within Babies 'R Us stores—and an additional eight outlet stores.
Teva Pharmaceuticals was upgraded to "outperform" from "perform" at Oppenheimer.
And Stifel Nicolaus started coverage of Amgen with a "buy" rating.
On the M&A front, 3M said it will buy Arizant, a company that makes heating blankets used to regulate the body temperature of patients undergoing surgery, for $810 million. This is 3M's third acquisition in about a month.
And there's buzz that 7-Eleven has made an offer of $40 a share for Midwest convenience-store chain Casey's.
French drug maker Sanofi-Aventis said it has not raised its offer for Genzyme , which remains at $18.5 billion, or $69 a share.
Volume was expected to be low again today, given the Jewish New Year holiday, Rosh Hashanah.
— Reuters contributed to this article.
On Tap This Week:
THURSDAY: New York Fashion Week begins, oil inventories, 30-year Treasury bond auction; after-the-bell earnings from National Semi
FRIDAY: Wholesale trade
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