Focused on an economic recovery, investors shook off disappointing news and kept Wall Street's summer rally going.
Investors sent stocks higher for a second day in a row Thursday, giving all the major indexes a moderate boost and adding to the gains that followed upbeat comments from the Federal Reserve a day earlier.
Financial, technology and energy companies were among the big winners, while stocks in defensive, or relatively safer, industries like health care fell. Retailers declined after a worse-than-expected report on retail sales.
Meanwhile, Treasury prices rose after the government had a successful auction of 30-year bonds. The Treasury Department issued a total of $75 billion of debt this week as part of its ongoing efforts to fund the government's stimulus programs, and investors were relieved that the market was able to absorb such a huge supply.
Analysts said Wall Street's showing Thursday was a sign of the market's resilience in light of economic reports that suggested the recovery could be slowed by a weak consumer. Investors seemed to look past the latest news and focus on the Fed's more upbeat assessment of the economy. Stocks soared Wednesday after the Fed said the economy was "leveling out," not just slowing its decline.
"You're not seeing people giving up on this economy," said Keith Springer, president of Capital Financial Advisory Services.
Among the day's reports, the Commerce Department said retail sales fell 0.1% in July, significantly worse than the 0.7% increase economists expected. Retail sales are considered a strong indicator of economic recovery because consumer spending accounts for more than two-thirds of all economic activity.
A weekly report on unemployment also came in worse than projected. The Labor Department said the number of newly laid-off workers filing claims for unemployment benefits rose unexpectedly to a seasonally adjusted 558,000, from 554,000 the previous week. Analysts were expecting new claims to drop to 545,000.
The Dow Jones industrial average rose 36.58, or 0.4%, to 9,398.19 after rising 120 Wednesday in response to the Fed's statement.
The Standard & Poor's 500 index rose 6.92, or 0.7%, to 1,012.73, while the Nasdaq composite index rose 10.63, or 0.5%, to 2,009.35.
Advancing stocks outpaced losers by 2 to 1 on the New York Stock Exchange, where consolidated volume fell to a light 5.3 billion shares from 5.5 billion shares a day earlier.
In other trading, the Russell 2000 index of smaller companies rose 3.02, or 0.5%, to 575.19.
Financial stocks led the day's gains, buoyed by news that the hedge fund run by John Paulson bought about 168 million shares of Bank of America. Paulson foresaw the distress in subprime mortgages and reaped billions by betting against the related securities, so his purchases of Bank of America stock are seen as a vote of confidence in the bank's future.
"He gives a lot of credibility because he certainly saw the danger on the credit side," said Anton Schutz, portfolio manager of Burnham Financial Industries Fund and Burnham Financial Services Fund.
Bank of America bac rose $1.07, or 6.7%, to $17. Regional banks also rose significantly after tumbling earlier in the week on downbeat comments from an analyst that raised doubts about some banks' ability to improve their earnings in the second half of the year.
Texas Instrumentstxn rose 66 cents, or 2.8%, to $24.54 after an analyst upgraded the stock. That helped lift other technology stocks.