updated 4/8/2005 9:45:53 AM ET 2005-04-08T13:45:53

Stocks trekked higher Thursday, as the prospect of a good earnings season and lower fuel prices brightened Wall Street’s mood, offsetting mixed retail sales for March and some bad news for the pharmaceutical sector.

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While investors still seem to be taking a day-to-day approach, the lack of seriously bad news combined with easing oil prices boosted buyers’ confidence. Barring any negative surprises, analysts said the market’s path of least resistance, at least in the short term, could be to slowly trend higher.

“We see a lot more things right now pointing to the possibility of a higher market than we do to a panic sell-off,” said Bill Groenveld, head trader for vFinance Investments. “I think we’ll see a slow trend back up as earnings start to roll out, and some easier breathing with a softening in the oil prices.

Still, with expectations running high, “anything worse than pretty darn good earnings could have a psychologically negative impact,” he cautioned, and investors will be intensely focused on forward-looking forecasts.

The Dow Jones industrial average was up 60.30 points, or 0.6 percent, at the close of trading, while the broader Standard & Poor’s 500-stock index was up 7.07 points, or 0.6 percent. The Nasdaq composite index finished up 19.65 points, or 1 percent.

There were also signs of further improvements in the labor market. The number of Americans applying for unemployment benefits dropped by 19,000 last week, the largest decline in two months, pushing the level of claims down to 334,000 after they’d unexpectedly jumped by 23,000 last week. The four-week moving average, which smoothes out week-to-week volatility, dipped slightly to 336,500.

Most important for equities, oil prices slid $1.74 to $54.11 on the New York Mercantile Exchange, following the lead of gasoline futures. The sell-off came as the U.S. Energy Department on Thursday predicted that gasoline prices, now averaging $2.22 a gallon nationwide, would peak at about $2.35 a gallon this summer. Analysts noted that while demand remains strong, supplies are above last year’s levels.

“It’s very, very encouraging, especially at the beginning stages of earnings season, that we don’t have the oil cloud hanging over our head,” said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. “If it holds at these levels going into earnings season ... we could end up having a pretty good month.”

Earnings season got off to a strong start when Alcoa Inc. reported better-than-expected profits after the market closed Wednesday; its shares surged 5 percent, or $1.49, to $31.47. Bed Bath & Beyond Inc. surged 11 percent, or $4.06, to $40.80, as strong sales growth helped its fourth-quarter earnings climb more than 25 percent year-over-year.

The nation’s retailers reported mixed sales for March as unusually cold weather and soaring gasoline prices offset the benefits of an early Easter holiday.

Discount retailer Target Corp. was up 77 cents at $50.74 after reporting sales growth of 8.2 percent for March, beating the expectations of analysts. A number of teen retailers also posted better-than-expected sales, including American Eagle Outfitters Inc., which was down 41 cents at $29.77, and Bebe Stores Inc., up $1.38 at $35.38.

The world’s largest retailer, Wal-Mart Stores Inc., shed 60 cents to $48.90 after lowering its earnings forecast for the quarter due to disappointing sales growth in March; it also projected lower sales growth for April.

Pfizer Inc. closed up 4 cents at $26.90 after spending much of the day in negative range after regulators asked it to withdraw the painkiller Bextra from the market because it increases the risk of heart attack and stroke. The Food and Drug Administration also wants all other anti-inflammatory drugs in the same class to carry the strongest safety warning possible.

Merck & Co., which voluntarily pulled its Vioxx drug from the market Sept. 30 after heart problems were reported in some users, gained 60 cents to $33.49.

Overseas, Japan’s Nikkei stock average shed 0.1 percent. In Europe, France’s CAC-40 added 0.4 percent, Britain’s FTSE 100 rose 0.6 percent and Germany’s DAX index was up 0.2 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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