A jump in exports lifted stocks Thursday, offsetting concerns about an increase in unemployment claims.
The market came away with moderate gains for the day after the Commerce Department said rising exports helped narrow the nation's trade gap to $32.9 billion in October. Economists had been expecting an increase.
A weaker dollar is raising demand for U.S. goods by making them less expensive for overseas buyers. That trend helped to lift U.S. exports by 2.5 percent, the sixth straight monthly increase.
James Cox, managing partner at Harris Financial Group in Colonial Heights, Va., said stepped up demand for U.S. goods will boost the nation's economy.
"Any time you have a small trade balance, that will really contribute greatly to GDP," Cox said, referring to gross domestic product.
The trade figures helped offset mixed jobs numbers. The Labor Department said the number of laid-off workers seeking jobless benefits rose more than expected last week to 474,000 after falling for five straight weeks. That was higher than analysts were expecting but a less-volatile four-week average fell to the lowest level since September 2008.
The gains in stocks came as the dollar stabilized. For months, stocks and the dollar have moved in the opposite direction. Record-low U.S. interest rates have made the dollar less attractive to investors who are more confident in an economic recovery and seeking assets like stocks and commodities that can offer better returns than cash.
In recent weeks, signs of improvement in the economy have brought expectations that the Federal Reserve might raise interest rates sooner than expected. That would strengthen the dollar and could shake up the stock market as investors rejigger their portfolios.
Anthony Chan, chief economist at JPMorgan Private Wealth Management in New York, said the increase in weekly unemployment claims eroded some of the enthusiasm over rising exports.
"That is what's preventing the market from really galloping higher," Chan said.
The Dow Jones industrial average rose 66.78, or 0.7 percent, to 10,405.83, pushing it back into the winning column for the month. The Dow is up 120 points in two days after falling 104 on Tuesday on worries about rising debt loads in a number of countries.
The Standard & Poor's 500 index rose 6.40, or 0.6 percent, to 1,102.35, while the Nasdaq composite index rose 7.13, or 0.3 percent, to 2,190.86.
Chan said investors are not only eager to guard their gains as the end of the year approaches but are also harder to impress following the government's report last week that employers cut fewer jobs in November than at any time since the recession began two years ago.
"It raises the hurdle to get the market excited," he said.
The S&P 500 index is up 22 percent for the year after a nine-month rally but hasn't gained much ground in the past month.
In other trading, Treasury prices fell for a second day after an auction of 30-year bonds drew weak demand. The slump in prices for long-dated bonds pushed yields higher. The yield on the benchmark 10-year Treasury note rose to 3.50 percent from 3.44 percent late Wednesday, while the yield on the 30-year bond rose to 4.51 percent from 4.42 percent.
Gold rose after a four-day slide, while oil fell for a seventh day, losing 13 cents to settle at $70.54 a barrel at the New York Mercantile Exchange.
Three stocks rose for every two that fell on the New York Stock Exchange, where consolidated volume came to 3.9 billion, compared with 4.2 billion Wednesday.
The Russell 2000 index of smaller companies fell 2.65, or 0.4 percent, to 595.38.
Britain's FTSE 100 rose 0.8 percent, while Germany's DAX index and France's CAC-40 each rose 1.1 percent. Japan's Nikkei stock average fell 1.4 percent.