NEW YORK -- A combination of strong company earnings and encouraging economic reports, both in the U.S. and Europe, gave the stock market another day of solid gains Thursday.
The Standard & Poor's 500 index rose 23.71 points, or 1.2 percent, to 1,950.82. The Dow Jones industrial average climbed 216.58 points, or 1.3 percent, to 16,677.90. The Nasdaq composite rose 69.95 points, or 1.6 percent, to 4,452.79.
Eight of the 10 sectors in the S&P 500 gained, led by a surge in industrial companies after Caterpillar and 3M reported their earnings.
Investors were cheered by a report that showed the number of people applying for U.S. unemployment benefits remains at a historically low level, suggesting that hiring is gaining steam. In Europe, a survey of businesses eased concerns that the region may be slipping back into recession.
Solid company earnings are sending the stock market higher and helping it recover from a jarring drop in mid-October that gave the S&P 500 index its biggest slump in two years. The index has gained on five of the past six trading sessions, and on Tuesday logged its biggest advance of the year.
"The economic backdrop here in the United States is continuing to look strong. Earnings are validating that," said Karyn Cavanaugh, a senior market strategist at Voya Investment Management.
Companies in the S&P 500 have reported average earnings growth of 5.5 percent for the third quarter, according to analysts at S&P Capital IQ. The rate of growth has slowed from 10.4 percent in the second quarter but is forecast to pick up in the final three months of the year.
Stocks had started the day higher, after European indexes gained ground and a survey of the manufacturing and services sectors eased some fears that the region could be falling back into recession.
Financial information company Markit said its composite purchasing managers index for the 18-country bloc, a broad gauge of business activity, rose to 52.2 in October from 52 in September. Analysts had expected a small decline. Readings above 50 suggest expansion.
Although the reports from Europe "weren't fantastic," they suggested that the region would avoid sliding back into recession, said David Lebovitz, Global Market Strategist at J.P. Morgan Funds. Concerns about the worsening growth outlook in Europe helped push stocks sharply lower last week.
"It almost feels like the markets can breathe a sigh of relief for the time being," Lebovitz said. "That, combined with the earnings numbers, is what's driving the market."
The price of oil rose on reports of lower production in Saudi Arabia and signs of strength in the U.S. economy. Benchmark U.S. crude rose $1.57 to close at $82.09 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, rose $2.12 to close at $86.83 on the ICE Futures exchange in London.
U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 2.28 percent from 2.22 on Wednesday.
Business on 10/24/2014