Upbeat corporate earnings gave stocks another burst of energy Thursday.
Stocks surged as stronger-than-expected profit reports and a surprise drop in the number of people continuing to seek unemployment benefits handed investors the latest evidence that the economy could be strengthening.
Earnings reports have driven a July rally and on Thursday gave investors new reasons to be optimistic about the prognosis for a recovery.
Motorola MOT used deep cost cuts to wring a profit from its latest quarter. Analysts had expected a loss. Goodyear Tire & Rubber's shortfall was half what had been expected and Dow Chemical's CEO said he believes the U.S. economy "has found bottom."
At the close of trading, the Dow Jones industrial average was up 83.74, or 0.9%, to 9,154.46. The Standard & Poor's 500 index rose 11.60, or 1.2%, to 986.75. The Nasdaq advanced 16.54, or 0.8%, to 1,984.30. It rose to nearly 2,010 in morning trading, its first move above 2,000 since Oct. 3. The index is up more than 55% from its low of 1,269 in March.
General Electric led the Dow higher after a Goldman Sachs analyst raised his rating on the stock and predicted the industrial conglomerate won't have to split off its lending arm under financial industry reform proposals circulating in Congress.
"There are some specific stock stories that are getting people involved and making people confident," said Nick Kalivas, vice president of financial research at MF Global in Chicago.
Investors also welcomed a report that the number of Americans continuing to collect unemployment benefits fell unexpectedly last week to 6.2 million. Economists polled by Thomson Reuters had expected that figure to rise to 6.3 million from 6.23 million in the prior week.
Analysts said the end of the month is pressuring money managers and traders to show they have participated in July's steep rally. Often, the summer months are quieter than the rest of the year on Wall Street as traders take vacations. But the Dow is on track for its best July in 20 years.
Some of the buying is likely tied to short-covering, where investors have to buy stock after having earlier sold borrowed shares in a bet they would fall.
"People kind of got caught a little flat-footed here. The summer is supposed to be slow," said Jon Merriman, chief executive of Merriman Curhan Ford in San Francisco.
About 2,500 stocks rose on the New York Stock Exchange, while only about 500 fell. Volume came to 949.5 million shares, compared with 776.4 million traded at the same point Wednesday.
The market's gain extends a rally that began July 13 when companies started reporting profits that exceeded analysts' modest expectations. Stocks made little progress in the last four days but some break in the buying had been expected after major stock indicators jumped 11% in two weeks.
Profit reports this month from some of the nation's best-known companies have boosted confidence that the longest recession since World War II might end this year. AT&T, chipmaker Intel and heavy equipment maker Caterpillar have posted results that were stronger than analysts had forecast.
Three out of four companies in the S&P 500 index that have reported results have topped analysts' expectations, according to Thomson Reuters. About 300 of the 500 companies have reported.
Investors rewarded the latest companies to beat expectations. Motorola rose 62 cents, or 9.4%, to $7.19. Goodyear rose $1.97, or 14.2%, to $15.86. Dow Chemical rose $1.26, or 6.2%, to $20.27.
GE rose 85 cents, or 6.9%, to $13.11 and was the biggest gainer among the 30 stocks that make up the Dow industrials.
Bond prices were mixed after a successful auction of $28 billion of seven-year notes. Weak demand at auctions earlier in the week raised concerns that the government might have to offer higher returns on bonds to lure in investors, which would have the negative effect of raising borrowing costs on loans such as mortgages.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.64% from 3.67% late Wednesday.
Light, sweet crude rose $3.59 to settle at $66.94 a barrel on the New York Mercantile Exchange after tumbling 6% Wednesday on fears economic growth in China would slow and curb demand for resources.
The dollar was mixed against other major currencies, while gold prices rose.
The Russell 2000 index of smaller companies rose 9.42, or 1.7%, to 557.80.
Overseas, Britain's FTSE 100 gained 1.9%, Germany's DAX index gained 1.7%, and France's CAC-40 rose 2.1%. Japan's Nikkei stock average rose 0.5%.