Stocks closed higher on Thursday but off highs reached earlier in the session -- when the major indexes reached their best levels of the year -- as profit taking pared gains. Investors sought more confirmation of a strong third quarter earnings season after Intenet media company Yahoo! (YHOO ) reported a sparkling quarter. News that weekly jobless claims declined to their lowest level in eight months had fueled a big rally that petered out by the end of trading.
The Dow Jones industrial finished up 48.49 points, or 0.51%, to 9,679.79 after rising in the triple digits. The broader Standard & Poor's 500 index added 4.94 points, or 0.48%, to 1,038.71. The tech-heavy Nasdaq composite index advanced 18.12 points, or 0.96%, to 1,911.90.
Wall Street was awaiting results on Friday from diversified conglomerate General Electric (GE ). Analysts on average are expecting the company to report earnings of $0.40 a share. Also reporting earnings on Friday is financial services outfit M&T Bank (MTB ).
Among the most closely watched economic figures due out Friday is a reading on prices at the wholesale level in September. Economic research unit MMS sees the Producer Price Index rising 1% vs. a 4% rise in the previous month. Also expected are data on U.S. trade in August and bank credit in September.
On Thursday, leading the market higher were Internet software and services, apparel retailers and airlines, while metals and mining and oil and gas companies were lower.
After the close of trading Wednesday, Yahoo reported profit that more than doubled over last year thanks in part of gains in the advertising market. The company also raised its expectations for the full year.
Raising Wall Street's hopes about an improving U.S. labor market, the government reported that the U.S. jobless claims fell 23,000 in the week ending Oct. 4 to 382,000, compared to an upwardly revised 405,000. This was a greater decline than expected.
Also helping drive the market higher was news from Wal-Mart Stores (WMT ), the world's largest retailer, that its September sales at U.S. stores open at least one year increased 6% percent, which was better than expected.
In earnings news, biotech giant Genentech (DNA ) posted 70% higher quarterly profit after the close on Wednesday thanks to sales of two key cancer drugs.
Also in the health care field, drugmaker Abbott Laboratories (ABT ) reported higher third quarter earnings on a boost in sales of certain drugs including its recently launched treatment for rheumatoid arthritis.
Management consulting firm Accenture (ACN ) posted sharply higher quarterly earnings thanks to increase in business managing operations for other companies.
On the negative side, world's biggest hotel chain operator Marriott International (MAR ) reported lower third-quarter profit as room rates declined.
Oil services firm Halliburton (HAL ) warned its third-quarter results will fall short of expectations because of higher legal fees and lower operating results from joint ventures.
U.S. Treasuries ended mostly lower on the stronger labor market news and on rally in equities. But MMS says that the selling pressure has not been intense. Technicals also don't bode well for additional weakness and suggest the market can turn around, MMS says.
In other economic news, import prices fell 0.5% in September after a revised 0.1% gain in August (+0.2% initially). Export prices rose 0.4% a revised flat reading in August (-0.1% previously). The decline in import prices was a function of the 5.2% drop in energy prices and the 1.3% decline in industrial supplies prices, economic research unit MMS says.
Recent weakness in the dollar suggests that a modest uptrend in prices should soon reappear in the trade price data, though a sluggish global economy should restrain any significant swings in prices. These figures will be overshadowed by the drop in jobless claims, MMS says.
Fed Governor Ben Bernanke stated in a Q&A that the current rate of economic growth would be sufficient to for "significant" job creation. However, he also said that economic growth "would not necessarily lead to a policy of response in a way that it has in the past...there could be some lag between the output growth and a policy response," according to MMS.
European stock markets were trading higher. London's Financial Times-Stock Exchange 100 index was up 45.30 points, or 1.06%, to 4,313.90 led by Amersham on speculation of a buyout of the company after reports that GE may be interested in it. Steelmaker supplier Cookson Group rose after positive analyst comments.
In Paris, the CAC 40 was up 76.38 points, or 2.35%, to 3,324.99 led by retailers Pinault-Printemps-Redoute, Carrefour and tech co. STMicroelectronics.
Germany's DAX index added 86.57 points, or 2.55%, to 3,481.90. Among the gainers were Deutsche Bank, Bayerische Motoren Werke, Hugo Boss and GPC Biotech.
Asian markets finished mixed. In Japan, the Nikkei 225 index lost 10.76 points, or 0.10%, to 10,531.44 as major stock indices in Tokyo were little changed on Thursday, pressured by fears about further appreciation of the Yen. In Hong Kong, the Hang Seng index gained 79.57 points, or 0.68%, to 11,800.37.