The stock market's rally plodded along Thursday, sustained by gains in financial and industrial shares.
Major indexes overcame early losses and finished slightly higher, including the Dow Jones industrial average, which added 37 points to set a fresh 2009 high. The Dow has risen for eight straight days, its longest winning streak since April 2007.
Trading lacked enthusiasm, however, as it has over the last week, with many investors shying away from making greater commitments to stocks.
Volume has been extremely light as many traders go on vacation, adding to the market's recent choppiness. The day's economic news, including a slightly smaller-than-expected drop in initial unemployment claims and a benign reading on gross domestic product, did little to excite investors.
Analysts say the market has been running on its own momentum more than anything else, adding that a lot of the improving economic data have already been priced into stocks.
A lot of activity has also been driven by short-covering, analysts say, which tends to amplify gains in the market. Short-covering occurs when investors have to buy stock after having earlier sold borrowed shares in a bet they would fall.
Traders have been anticipating a pullback for weeks, but the declines that have occurred tend to be met with more buying.
"There is just too much cash sitting on the sidelines," said Phil Orlando, chief equity market strategist at Federated Investors.
After giving up as much as 84 points early on, the Dow rose 37.11 points, or 0.4%, to close at 9,580.63. The Dow's eight-day advance totals 445 points, or 4.9%.
The Standard & Poor's 500 index rose 2.86 points, or 0.3%, to 1,030.98, while the Nasdaq composite index rose 3.30 points, or 0.2%, to 2,027.73.
Both the S&P; 500 and the Nasdaq composite indexes have finished higher seven out of the last eight days, rising about 5% over that period.
About eight stocks rose for every seven that fell on the New York Stock Exchange, where consolidated volume came to 5.8 billion shares, compared with 5.1 billion shares Wednesday.
Despite the run-up in stocks, investors are nervous about overextending the market's massive spring and summer rally, in which stocks have risen more than 45% from 12-year lows since early March.
"You tend to have those moves run out of steam at some time," said Art Hogan, chief market analyst at Jefferies & Co.
Big gains in a handful of financial stocks helped to turn the market around. Shares of American International Group surged nearly 27%, rising $10.15 to $47.84, as analysts speculated the company might be reconciling with former CEO Maurice "Hank" Greenberg, who could help bring private capital to the company. AIG shares have more than doubled in eight days.
CIT Group jumped 22.8%, adding 29 cents to $1.56. Citigroup rose 42 cents, or 9.1%, to $5.05.
Shares of Boeing rose, giving a boost to the Dow, after the company said its long-delayed 787 aircraft would be ready for its first flight by the end of this year. Shares jumped $4, or 8.4%, to $51.82.
Energy stocks, which had weighed on the market early in the day, pulled off of their lows as oil prices turned higher. Like stocks, oil prices have been extremely volatile in recent weeks as investors have tried to determine whether current prices are warranted given still weak demand.
Crude for October delivery climbed $1.06 to $72.49 a barrel on the New York Mercantile Exchange.
Among the economic news Thursday, the Labor Department said first-time jobless claims fell 10,000 last week to 570,000, just shy of economists' expectations. The number of workers continuing to file for benefits, however, fell more than expected, declining to 6.13 million from 6.25 million the previous week.
It was the lowest level for continuing claims since early April.
Meanwhile, a Commerce Department report showed the economy shrank at a 1% annualized rate in the second quarter. The updated figure was unchanged from a preliminary reading on gross domestic product and slightly better than the 1.5% decline that was forecast.
In other trading, bond prices were mostly lower even after a strong auction of seven-year notes. The yield on the 10-year note rose to 3.46% from 3.44%.
The dollar was mixed, while gold prices inched higher.
The Russell 2,000 index of smaller companies slipped 0.25, or 0.04%, to 583.77.
Asian stocks fell after China said it would cut investment in some industries. Japan's Nikkei stock average lost 1.6%, while China's main index fell 0.7%.
Britain's FTSE 100 fell 0.4%, Germany's DAX index fell 0.9% and France's CAC-40 lost 0.5%.