Wall Street extended its rally with modest gains in the major indexes following two days of sharp advances, despite economic readings that painted a mixed picture of the economy.
Though the indexes rose, declining issues narrowly outpaced advancers on the New York Stock Exchange.
On Tuesday and Wednesday, the market posted its biggest two-day rally in five years. Hopes have been growing that financial companies may be starting to recover from the credit crisis and that the Federal Reserve may lower interest rates to calm the markets.
Wall Street's anticipation of a rate cut came ahead of a speech Thursday evening by Fed Chairman Ben Bernanke.
Speaking to business people in Charlotte, N.C., Bernanke hinted that another interest rate cut may be needed to bolster the economy. The worsening credit crunch, a deepening housing slump and rising energy prices probably will create some "headwinds for the consumer in the months ahead," he said.
Bernanke said he expects consumer spending will continue to grow and suggested the country can withstand the current problems without falling into a recession. But he indicated that consumers could turn more cautious as they try to cope with all the stresses.
The odds have grown that the country could enter a recession. A sharp cutback in consumer spending could send the economy into a tailspin. Against this backdrop, Fed policymakers will need to be "exceptionally alert and flexible," Bernanke said.
That comment probably will be viewed as a sign the Fed may lower interest rates when it meets on Dec. 11, its last session of the year.
The Dow Jones industrial average rose 22.28, or 0.17 percent, to 13,311.73.
Broader stock indicators also rose. The Standard & Poor's 500 index edged up 0.70, or 0.05 percent, to 1,469.72, and the Nasdaq composite index rose 5.22, or 0.20 percent, to 2,668.13.
Declining issues outnumbered advancers by about 9 to 7 on the New York Stock Exchange, where volume came to 1.33 billion shares compared with 1.30 billion traded Wednesday.
Light, sweet crude for January delivery rose 39 cents to settle at $91.01 a barrel in choppy trading on the New York Mercantile Exchange. The rise in oil helped energy companies. Exxon Mobil Corp. rose 67 cents to $88.59, while ConocoPhillips advanced $1.10 to $78.82.
Stocks' fluctuations followed the mixed economic readings.
The Commerce Department reported that economic growth in the third quarter was 4.9 percent, faster than originally thought, although analysts are anticipating a slowdown in the fourth quarter.
U.S. home prices showed a quarterly decline for the first time in 13 years in the third quarter, according to figures from the Office of Federal Housing Enterprise Oversight, which reported a 0.4 percent drop nationwide for the July-September period.
In other corporate news, Sears Holdings, parent of its namesake department store chain and Kmart, said profits plunged to a penny per share from $1.27 per share a year earlier due to lower sales and clearance markdowns. Sears Holdings fell $12.25, or 10.5 percent, to $104.09.
The Russell 2000 index of smaller companies fell 3.98, or 0.52 percent, to 766.06.