NEW YORK -- Wall Street pushed higher Thursday as a drop in jobless claims and an upbeat outlook from IBM recharged investors' hopes that the economy was improving.
Analysts said many investors were largely brushing off mixed economic data in favor of news suggesting rebounding corporate profits by year's end.
"It's three steps forward, two steps back," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray. "Investors are looking towards the second half of the year and ignoring what will be an average second quarter."
But he added, "caution is still the watchword. People are expecting the market to pull back because it had a pretty dynamic move in the last two months."
By late afternoon, the Dow Jones industrial average was up 58.12, or 0.7 percent, at 8,705.94, following a two-day loss of 78 points.
The broader market also advanced. The Nasdaq composite index rose 13.12, or 0.9 percent, to 1,548.02. The Standard & Poor's 500 index gained 6.49, or 0.7 percent, to 945.77.
The Labor Department reported that new applications for jobless benefits fell by a seasonally adjusted 13,000 to 417,000 last week, the third straight week of declines. Analysts were expecting claims to rise.
Separately, the department said wholesale prices plunged by a record 1.9 percent in April, compared to a 1.5 percent gain in the previous month. The report seemed to underscore that inflation isn't a problem, although it could stoke fears of deflation.
Another report highlighted a sluggish manufacturing sector, however. The Federal Reserve reported that production at the nation's factories, mines and utilities fell by 0.5 percent in April for the second month in a row. Economists were forecasting a 0.4 percent decline.
Investors have sent stocks higher in recent weeks on encouraging earnings, but now they are looking for strong signs of an economic rebound by year's end. Until they see that evidence, trading will be choppy and likely confined to a range, analysts said.
"While things aren't great yet, they are starting to look up," said Ed Peters, chief investment officer at PanAgora Asset Management Inc. "As long as interest rates stay low, it will put a bottom on the stock market."
IBM, a Dow component, rose $1.06 to $89.76 after the company's chief executive said demand in the technology sector is stabilizing.
Computer Associates climbed $2.07, or 11.4 percent, to $20.26 after the technology company reported quarterly earnings that beat Wall Street's estimates; however, it also disclosed it had received two more federal subpoenas in connection with its accounting practices.
Intuit advanced $2.85 to $41.83 after the maker of tax preparation software reported fiscal third-quarter operating earnings that beat estimates by 4 cents per share.
Decliners included Target, which fell $1.06 to $34.87, after the retailer reported first-quarter earnings that fell a penny short of analysts' expectations.
Advancing issues outnumbered decliners about 8 to 5 on the New York Stock Exchange. Volume was moderate at 1.12 billion shares, compared with 1.06 billion traded at the same point Wednesday.
The Russell 2000 index, a barometer of smaller company stocks, rose 2.15, or 0.5 percent, to 421.59.
Overseas, Japan's Nikkei stock average finished 1.5 percent lower Thursday. In Europe, France's CAC-40 gained 1.2 percent, Britain's FTSE 100 rose 0.9 percent and Germany's DAX index climbed 2.2 percent.
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