U.S. stocks gained on Thursday for a second day, with the Dow at its highest since January, after financial shares reversed losses and Merrill Lynch & Co. said it has enough capital to maintain its dividend, while retailers got a boost from lower oil prices.

Merrill, the largest brokerage, gained to a one-month high. Ford Motor Co., the second-biggest U.S. automaker, jumped the most in 28 years after posting an unexpected first-quarter profit. Target Corp. and Macy's Inc. gained as the dollar rallied the most in four years against the euro and oil fell for a second day. Positive broker views on Apple Inc also boosted sentiment.

The Standard & Poor's 500 Index climbed 16.43 points, or 1.2 percent, to 1,396.36 at 2:16 p.m. in New York. The Dow Jones Industrial Average added 169.19, or 1.3 percent, to 12,932.41.

The Nasdaq Composite Index increased 36.95, or 1.5 percent, to2,442.16, helped by a 4 percent gain in Apple Inc. after analysts raised price estimates for the stock.

Merrill's CEO John Thain said he will not separate the firm's brokerage from its investment bank or sell its 49.8 percent stake in BlackRock Inc., the New York-based money manager. He also confirmed that Merrill's passive 20 percent stake in Bloomberg LP, the parent of Bloomberg News, will not be sold. The company's shares rallied $3.65 to $48.56.

Ford, the world's third-largest automaker, reported a surprising first- quarter profit of $100 million as lower North American expenses made up for falling U.S. sales. Fords gained 80 cents to $8.32.

Target, the second-biggest U.S. discount chain, added $1.30 to $53.68. Macy's Inc., owner of Bloomingdale's, climbed $1.20 to $24.41.

Starbucks dropped 11.2 percent or $1.99 after the coffee retailer warned second-quarter and annual profit will be hurt by decreased traffic at U.S. stores and a weakening of the U.S. consumer environment.

Shares of Apple, which reported results late Wednesday, rose 4 percent to $169.46

Crude oil for June delivery dropped $2.70 to $115.60 a barrel in New York as the dollar rose against the euro by the most since June 2004.