Stocks advanced modestly on Thursday with financial stocks leading gains after encouraging U.S. manufacturing data and a rebound in Chinese stocks reassured investors.
The optimism was enough to overshadow a disappointing employment report showing weekly jobless claims increased for a second week.
Financial stocks contributed the most to the market's rise, with Citigroup
Bank of America
Just the fact that the more-important jobless claims were overshadowed by the manufacturing data and rebound overseas shows how much optimism there is in the market now, said Dan Faretta, a senior market strategist at Lind-Waldock in Chicago.
Investors see financials as having been beaten down too bad, too fast... They link financials stocks with economic recovery, so they want to see the shares move higher.
The S&P Financial sector index <.GSPF> was up 2.35 percent, widely outperforming other sectors, and the KBW Bank index <.BKX> was up 2.62 percent.
Shortly before 3 p.m. EDT, the Dow Jones industrial average <.DJI> was up 46.93 points, or 0.51 percent, at 9,326.09. The Standard & Poor's 500 Index <.SPX> was up 8.06 points, or 0.81 percent, at 1,004.52. The Nasdaq Composite Index <.IXIC> was up 14.08 points, or 0.71 percent, at 1,983.32.
The U.S. earnings picture was mixed as packaged food makers H.J. Heinz Co
Shares of Heinz rose 1.6 percent to $38.56, while Hormel, maker of Spam processed meat, gained 0.7 percent to $37.50.
Factory activity in the U.S. Mid-Atlantic region turned positive in August, breaking a 10-month run of contraction, helped by a jump in new orders, a survey by the Philadelphia Federal Reserve Bank showed.
But initial claims for state unemployment insurance benefits rose 15,000, according to the Labor Department. Economists polled by Reuters had forecast a drop in new claims.
Goldman Sachs added Google Inc