In a sign of a bigger appetite for risk, investors moved money out of U.S. debt, a haven during the stock market's volatile second half of 2011. The yield on the 10-year U.S. Treasury note increased to 1.98 percent from 1.90 percent Wednesday.
The market was led by industries that tend to perform best when the economy is getting stronger - consumer-discretionary stocks, financials, and industrial companies.
Of the 10 categories of stocks in the S&P 500, the only one that lost considerable ground was utilities.
The economic news Thursday was good: The number of people seeking unemployment benefits plummeted last week to 352,000, the fewest since April 2008. The decline added to evidence that the job market is strengthening.
U.S. consumer prices were unchanged last month, a signal inflation is under control. In the housing market, a third straight increase in single-family home building in December was offset by a drop in apartment construction.
France and Spain also held successful bond auctions, easing concerns about the debt crisis in Europe.
Bank of America Corp. shares rose 2.35 percent, and those of Morgan Stanley rose 5.36 percent after reporting encouraging financial results. Bank of America returned to a profit in the last three months of 2011, while Morgan Stanley's loss was much less than forecast.
Renewable Energy Group Inc., the nation's largest producer of biodiesel, edged up 10 cents to $10.10 on its first day of trading. It was the first initial public offering of stock this year.
The Dow's gain for the day amounted to 0.36 percent. The S&P's came to 0.49 percent. The Nasdaq added 18.62 points, or 0.67 percent, to close at 2,788.33.
Among other stocks in the news:
Shares of eBay Inc., the online auction firm, rose 3.86 percent after it beat Wall Street earnings forecasts and gave a healthy outlook for the year.
Southwest Airlines Co. stock rose 3.10 percent after it said its fourth-quarter net income and revenue jumped. Southwest said it expected strong revenue in the first quarter, too, based on passenger-booking trends.
Shares of Johnson Controls Inc., a maker of auto parts and building equipment based in Milwaukee, fell 8.77 percent. Its profit and revenue fell short of Wall Street forecasts. It also cut its forecasts, blaming weaker auto production in Europe, a lower euro, and poor demand for batteries.