NEW YORK - Wall Street resumed its fourth-quarter rally Thursday, pushing the Dow Jones industrials to its first close above 12,400 after a series of strong company earnings and a drop in unemployment claims revived investors' confidence in the economy.
The market, which stalled earlier this week on interest rate and economic concerns, was reinvigorated by robust quarterly profits from Bear Stearns Cos., Lehman Brothers Holdings Inc., and Costco Wholesale Corp., as well as healthy outlooks from Citigroup Inc. and Honeywell International.
Wall Street was also boosted by the Labor Department's report that the number of Americans filing for unemployment benefits plunged for a second straight week. The data suggested the U.S. economy won't cool as quickly as some investors feared.
"As far as I can tell, consumers keep spending as long as unemployment is low," said Ed Peters, chief investment officer at PanAgora Asset Management Inc.
Airline stocks were pummeled by rising oil prices, after the Organization of Petroleum Exporting Countries said it is keeping its oil production target stable for now, but making cuts in February. Overall, though, the stock market was unfazed by the possibility of higher fuel prices dampening consumer spending and hiking companies' materials costs.
The Dow rose 99.26, or 0.81 percent, to a new closing record of 12,416.76, after hitting a new trading high of 12,431.26 earlier in the session. The Dow, which last hit a record close of 12,342.56 on Nov. 17, is up 16 percent this year.
Broader stock indicators also rose sharply. The Standard & Poor's 500 index climbed 12.28, or 0.87 percent, to a six-year record of 1,425.49, after reaching a six-year trading high of 1,427.23. The technology-laden Nasdaq composite index rose 21.44, or 0.88 percent, to 2,453.85.
Bond prices fell again Thursday, with the yield on the benchmark 10-year Treasury note rising to 4.60 percent from 4.58 percent late Wednesday. The dollar rose against other major currencies, while gold prices slipped.
Oil prices shot higher after the OPEC announcement. Crude oil for January soared $1.14 to settle at $62.51 a barrel on the New York Mercantile Exchange.
The stock market had been moving cautiously over the past week, inching up and then pulling back after the Federal Reserve left interest rates steady on Tuesday and offered no hints that it might start lowering them. But Thursday's positive corporate and economic news sparked a resumption of stock buying, extending the Dow's upward climb. The Dow reached record territory past 12,000 for the first time in nearly seven years this fall.
"We're in that Santa Claus rally time, and there's nothing to stop it today," said Arthur Hogan, chief market analyst at Jefferies & Co. He said the market seems to be looking past rising fuel prices.
Though stocks have bounced back, the economic picture remains mixed, analysts said.
"There have been a few good earnings coming out, in addition to energy stocks rising because of oil," Peters said. "But it's also against the backdrop of bond yields rising and energy prices going up, which is negative for everybody ... The market seems to be largely ignoring the very real possibility of another interest rate hike instead of a cut."
Investors will be closely watching Friday's release of consumer price figures for November, which could provide clues to the Fed's plan for next year.
The tech sector got a boost from Ciena Corp.'s robust profits and a forecast by Advanced Micro Devices Inc. of cost savings from its acquisition of ATI Technologies. Ciena, which makes equipment for fiber optic communication networks, rose $2.87, or 11.5 percent, to $27.83, and Advanced Micro gained $2.54, or 12.6 percent, to $22.71.
Investors were also cheered by Costco, which said late Thursday its profit in the latest quarter rose 10 percent. The nation's largest wholesale club operator rose 97 cents to $54.11.
Bear Stearns climbed $4.07, or 2.6 percent, to $159.96 on its strong financial results. Lehman Brothers slipped 29 cents to $76.08, as investors were slightly disappointed that the firm did not produce record fourth-quarter profits, as its rivals Bear Stearns and Goldman Sachs Group Inc. did. Goldman reported its results Tuesday.
Meanwhile, Citigroup rose 79 cents to $53.11, after the largest U.S. financial institution's chief executive unveiled plans to improve profitability in 2007. Diversified manufacturer Honeywell rose 83 cents, or 2 percent, to $42.69, after saying it expects a 5 percent rise in sales and double-digit earnings growth next year.
Higher energy prices were a boon to oil companies' stocks, pushing Chevron Corp. up $1.57, or 2.1 percent, to $75.97; ConocoPhillips up $2.07, or 2.9 percent, to $73.07; and ExxonMobil Corp. up $1.37 to $78.73.
But airlines buckled under the prospect of higher fuel costs. Continental Airlines Inc. fell 42 cents to $44.34; Southwest Airlines Co. fell 19 cents to $15.75; and UAL Corp., parent company of United Airlines, fell 69 cents to $44.55.
The Russell 2000 index of smaller companies was up 5.47, or 0.69 percent, at 794.22.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 1.57 billion shares, compared with 1.47 billion at the same point Wednesday.
U.S. stocks aren't the only equities that have rallied lately. Chinese stocks on Thursday hit record highs, with the Shanghai Composite Index gaining 1.2 percent to close at 2,249.11, its highest closing level ever. It hit a trading high of 2,250.32, up from the previous record of 2,245.43 reached back in June 2001.
Australian and New Zealand markets also rallied to new records Thursday.
In other overseas markets, Japan's Nikkei stock average closed up 0.82 percent. Britain's FTSE 100 closed up 0.57 percent, Germany's DAX index closed up 0.49 percent, and France's CAC-40 closed up 0.62 percent.