Stocks rose on Thursday as better-than-expected monthly sales from retailers and a drop in the number of Americans filing claims for jobless benefits pointed to stabilization in the economy.
The boost from February retail sales, which were expected to have been hurt by the severe weather across the United States, lifted retailers' shares as the S&P retail index <.RLX> added 1.3 percent.
Initially trading was choppy as investors weighed mixed economic reports ahead of February non-farm payrolls data on Friday. But stocks rallied in the last 15 minutes before the close in a sign traders were bullish ahead of the jobs data.
The jobless claims and the retail sales were better than the market expected, and we also saw some upgrades from analysts, said Quincy Krosby, market strategist with Prudential Financial in Newark, New Jersey.
It would suggest to me that traders especially are sensing that the non-farm payrolls number would not surprise to the downside tomorrow, she said.
The report is expected to show employers cut 50,000 jobs last month, according to economists polled by Reuters, but investors are concerned poor weather conditions may cloud the reading, and forecasts are in an unusually broad range.
The market has been strong recently with the S&P 500 up 1.7 percent so far this week. The Dow industrials turned positive for the year, joining the S&P 500 and the Nasdaq, which rose above the break-even mark earlier in the week.
The Dow Jones industrial average <.DJI> gained 47.38 points, or 0.46 percent, to 10,444.14. The Standard & Poor's 500 Index <.SPX> rose 4.18 points, or 0.37 percent, to 1,122.97. The Nasdaq Composite Index <.IXIC> added 11.63 points, or 0.51 percent, to close at 2,292.31.
The S&P 500 is now down 2.4 percent from a 15-month closing high set on January 19, after falling more than 8 percent through February 8.
RUSSELL 2000 INDEX ON A ROLL
The Russell 2000 index of small-cap stocks <.RUT> closed at another 17-month closing high, a move that suggests it may just be a matter of days before other indexes retest the highs of the rally from the lows hit in early March 2009.
Fundamentally, small-caps are considered harbingers of an early upturn in the economic cycle since smaller companies are more sensitive than multinationals to domestic business activity.
Of 28 retailers reporting sales, 76 percent have topped analysts' expectations, with a median surprise of 2.1 percent, according to Thomson Reuters data.
A LITTLE NIRVANA FOR TEEN RETAILERS
Top gainers there included Abercrombie & Fitch Co
The S&P consumer discretionary index <.GSPD> rose 1 percent, with that sector one of the strongest in the market.
In a mixed day for economic indicators, National Association of Realtors said pending home sales fell unexpected in January, while a separate government report showed factory orders rose 1.7 percent for the month.
Data from the housing market has been weak recently and the latest data weighed on home builders' shares. The Dow Jones home construction index <.DJUSHB> fell 0.9 percent, with KB Homes
Positive brokerage notes helped blue chips head higher, with Boeing Co
But natural gas futures slid after a government report showed an unexpectedly light inventory drawdown. The NYSE Arca Natural Gas index <.XNG> slipped 1 percent, while crude oil futures fell nearly 0.5 percent toward $80 a barrel.
Earlier in the day, data showed the number of U.S. workers filing new claims for state unemployment benefits fell, and were better than expectations.
About 7.38 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on both the NYSE and the Nasdaq by a ratio of nearly 3 to 2.
(Reporting by Edward Krudy; Editing by Jan Paschal)