Investors sent stocks mostly higher for a second day Thursday, giving all the major indexes a moderate boost -- to 2009 highs -- as buyers continued to bet on an improving economy.
Financial, technology and energy issues were among the winners, while stocks in so-called defensive, or relatively safer, industries such as healthcare fell. Retailers were mixed after a worse-than-expected report on July sales.
Meanwhile, Treasury bond yields fell after the government saw strong demand at its auction of $15 billion in new 30-year bonds, capping this week's total of $75 billion of debt sales.
Stocks had surged Wednesday on better-than-expected quarterly results from companies including builder Toll Bros. and retailer Macy's. The market also was buoyed late in the session by relatively upbeat comments from Federal Reserve policymakers, who said the economy was "leveling out."
The rally was extended Thursday. The Dow Jones industrial average rose 36.58 points, or 0.4%, to 9,398.19 after gaining 120 points the previous day.
The Standard & Poor's 500 index added 6.92 points, or 0.7%, to 1,012.73, while the Nasdaq composite climbed 10.63 points, or 0.5%, to 2,009.35.
Advancing stocks outnumbered losers 2 to 1 on the New York Stock Exchange, where consolidated volume fell to a light 5.3 billion shares from 5.5 billion a day earlier.
The Russell 2000 index of smaller companies rose 3.02 points, or 0.5%, to 575.19.
In other market highlights:
* Bank of America gained $1.07, or 6.7%, to $17 on word that hedge fund investor John Paulson bought 168 million shares in the second quarter, to become the bank's fourth-largest shareholder.
* Texas Instruments rose 66 cents, or 2.8%, to $24.54 after an analyst upgraded the stock.
* Wal-Mart Stores rallied $1.37, or 2.7%, to $51.88 after the world's largest retailer reported better-than-expected second-quarter earnings.
Still, some analysts were surprised that the market didn't react badly to the government's report of a decline in retail sales in July -- another sign of American consumers' struggles.
"You're not seeing people giving up on this economy," said Keith Springer, president of Capital Financial Advisory Services.
* The S&P; 500 index has risen 15.2% in little more than a month and 49.7% since it fell to a 12-year low in early March.
* In the bond market, the yield on the benchmark 10-year Treasury note fell to 3.59% from 3.70% on Wednesday, after the government sold new 30-year bonds at a yield of 4.54%, which was slightly below expectations.
* Near-term oil futures added 36 cents to settle at $70.52 a barrel in New York.
* In China, the Shanghai market index rebounded after a recent 10.3% slide, gaining 0.9% to 3,140.