The Standard & Poor's 500, the Dow Jones industrial average and the Russell 2000 index were all on track to set new records. The S&P broke through 1,700 points for the first time.
The gains were driven not by any one major event but by a steady flow of encouraging, if incremental, reports on the global economy.
Overnight, a positive read on China's manufacturing helped shore up Asian markets. Then, an hour before the U.S. market opened, the government reported that unemployment claims fell last week. After the market opened, a trade group announced that U.S. factories revved up production last month. And throughout the day, while company earnings reports brought both winners and losers, investors were able to find enough that they liked in companies including CBS and Yelp.
"It's just a lot of things adding up," said Russell Croft, portfolio manager of the Croft Value Fund in Baltimore. "It's hard to put your finger on why exactly, but basically it's a bunch of pretty good data points coming together to make a very good day."
Overall, analysts said, the news was good but not overwhelmingly so — enough to give hope that the economy is improving, but not enough to prompt the Federal Reserve to withdraw its economic stimulus programs.
Earnings results covered a wide range. Boston Beer, which makes Samuel Adams, and home shopping network operator HSN rose after beating analysts' estimates for earnings and revenue. Kellogg, the health insurer Cigna, and cosmetics maker Avon were down after beating earnings predictions but missing on revenue.
It's becoming a familiar template this year. Stock indexes have been setting record highs even while the underlying economy is more often described as decent, but no going gangbusters.
Take company earnings, the most important thing for stock investors. Earnings at S&P 500 companies are up 4.8 percent this quarter, and revenue is down 0.5 percent, according to S&P Capital IQ. In previous eras, that hardly would have been considered encouraging. In the second quarter of 2007, before the financial crisis imploded, earnings rose 9 percent and revenue rose 6 percent. Compared with the second quarters of 2008 and 2009, when earnings plunged, this year's results look relatively good.
Other economic indicators have been following a similar fashion. While layoffs are steadily declining, companies aren't hiring as quickly as they did before the crisis. The economy is growing, but not fast enough to drive significant job growth. The Commerce Department reported this week that the U.S. grew at a tepid annual rate of 1.7 percent in the second quarter.
"They're not great numbers, but they're positive and they're continuing to grow," said Tim Courtney, chief investment officer of Exencial Wealth Advisors in Oklahoma City. "That's about all the market needs to hear."
The S&P 500 was up 21 points, or 1.2 percent, to 1,707 in the final hour of trading. The Dow rose 128 points, or 0.8 percent, to 15,627. The Russell 2000 rose 14 points, or 1.3 percent, to 1,059.
The Nasdaq composite index rose 46 points, or 1.3 percent, to 3,672, in line with the daily gains of the other indexes but not near its record. The Nasdaq, which is heavily weighted with technology stocks, briefly veered above 5,000 in 2000, just before the bursting of the Internet bubble.
Investors said Thursday that the S&P's crossing of the 1,700-point line might give consumers a psychological boost, but they were hardly crowing about a new era in stocks. Turns out it's quite common for stock indexes to hit records. Since 1950, the S&P 500 has hit a new high about 7 percent of the time, or an average of about every 15 days, Courtney said.
The S&P 500 did make the jump to 1,700 from 1,600 in less than three months. The index first traded above 1,600 on May 3. The previous 100-point gain took much longer to achieve: The index first closed above 1,500 in March 2000.
The market's sharp advance Thursday was a stark contrast with the previous two days, when the S&P 500 moved less than a point each day. On Tuesday, investors didn't want to make big moves ahead of the Federal Reserve's policy announcement the next day. On Wednesday, the Fed didn't make much news after all. The central bank said, unsurprisingly, that the U.S. economy was recovering but still needed help. The Fed didn't give any indication of when it might cut back on its bond-buying program, which has been supporting financial markets and keeping borrowing costs ultra-low.
Among the economic and corporate news that investors digested Thursday:
— China's purchasing managers' index — a gauge of business sentiment — rose to 50.3 in July from 50.1 in June. Analysts had expected a modest decline below 50.
— The Labor Department said that the number of Americans applying for unemployment benefits fell 19,000 to 326,000. That was the fewest since January 2008.
— The Institute for Supply Management, a trade group of purchasing managers, said Thursday that its index of factory output jumped to 55.4 in July, up from 50.9 in June. A reading above 50 indicates growth.
— Auto companies reported healthy sales gains for July. Ford, Chrysler and Nissan each reported sales growth of 11 percent compared with the same month a year ago.
An index of transportation stocks also rose sharply. Many investors see that sector as a leading indicator for the economy since freight and shipping companies tend to get busier as the economy improves.
The Dow Jones Transportation Average jumped 217 points, or 3.4 percent, to 6,679, led by a surge in Con-Way, a Michigan-based freight company that reported earnings Thursday that were far higher than investors expected. Con-Way rose $4.36, or 11 percent, to $45.81.
The price of crude oil rose $2.86, or 2.7 percent, to $107.89 a barrel. Gold slipped $1.80 to $1,311.20 an ounce. The dollar rose against the euro and the Japanese yen.
The yield on the 10-year Treasury note rose sharply, to 2.72 percent from 2.58 percent late Wednesday. That means investors were selling U.S. government debt securities, which are seen as ultra-safe, in anticipation that the economy would pick up and as they to moved money into higher-risk assets like stocks.
Among stocks making big moves:
—Sprouts Farmers Markets more than doubled on the company's first day of trading, jumping $20.37 to $38.36 — another sign that investors are increasingly comfortable with higher-risk investments.
—Yelp soared 26 percent, up $10.70 to $52.50. The review website continued to lose money, but it sold more ads and drew more visitors.
—Dell rose 29 cents, or 2 percent, to $12.95. Its shareholders are scheduled to vote Friday on an offer by CEO and founder Michael Dell to buy the company.
—Exxon Mobil fell $1.27, or 1 percent, to $92.48, after reporting lower earnings as oil and gas production slipped. Profit margins on refining oil also fell.