"Jobless claims were benign, so people were relieved by that," said Henry Herrmann, chief investment officer at Waddell & Reed Financial. "No one wants to see a bad claims or bad employment number."

The Dow Jones industrial average closed up 26.17, or 0.3 percent, at 9,423.68, having declined 31 points yesterday to snap a four-session winning streak.

The broader market also rose. The Nasdaq advanced 17.01, or 1 percent, to 1,777.55. The Standard & Poor’s 500 index edged up 0.92, or 0.1 percent, to 1,003.27.

The Labor Department reported today that 386,000 newly laid-off workers filed claims for jobless benefits last week, down 17,000 from the previous week. That is the lowest level of new jobless claims in six months.

The Conference Board, meanwhile, said its index of leading economic indicators rose by 0.4 percent in July to 112.5, after a revised 0.3 percent increase in the previous month. It was the fourth straight month of gains, and met analysts’ expectations.

And the Philadelphia Federal Reserve reported that its business index in August jumped to 22.1, compared to 8.3 in the previous month. Analysts were expecting a much more modest reading of 10.0.

"The Philly Fed index reading was excellent because it showed new orders and shipments were up," said Neil Massa, equity trader at John Hancock Funds. "For investors looking for a reason that the economy is turning around, that would be a big one."

Stocks have lurched higher in recent weeks as investors remain upbeat about a speedy recovery. But some analysts caution that the market might be due for a retreat because the economic outlook remains somewhat murky.

"I’ve been surprised that no matter what — whether it’s the blackout, bombings overseas or a computer virus — nothing can keep this market down," Massa said. "Yesterday’s sell-off seemed to be a bit of a rest. Nothing indicated a change of (market) direction."

But he noted that one potential cause for concern is that a gauge of investor anxiety, the Chicago Board Options Exchange’s volatility index (VIX), has been hovering around 20. Many consider that a reading below 20 means the market is vulnerable to future declines.

"My nervousness stems from the VIX, which shows some complacency. We have to continue to see economic numbers that point to a strong recovery" to sustain an upward trend, Massa said.

Monsanto climbed $1.43 to $24.12 after the developer of genetically engineered crops agreed to settle a lawsuit alleging it dumped polychlorinated biphenyls, or PCBs, in Alabama. Merrill Lynch upgraded the company’s stock rating to "buy" from "neutral."

Goodyear Tire & Rubber advanced 26 cents to $6.56 after it reached a tentative three-year contract with the United Steelworkers of America, reducing the threat of a strike.