NEW YORK - A rally in financial stocks yesterday helped the market extend its rise to a third day.
The Standard & Poor's 500 index closed just above its January peak to set a 17-month high. That could bring some hesitant buyers into the market.
Financial shares rose after Citigroup Inc. chief executive officer Vikram Pandit said the bank was on a path toward "sustained profitability" as it sells risky assets. The bank has been the hardest hit by the financial crisis, so the upbeat assessment helped boost expectations about the economy. The stock rose 5.56 percent.
Financials' climb helped offset concern about a spike in inflation in China. It said its inflation rate rose to 2.7 percent in February from 1.5 percent in January. A steep rise in prices could force China to raise interest rates. That could slow one of the fastest-growing economies and put a damper on a global recovery.
The Labor Department said workers filing for jobless benefits for the first time fell 6,000, to 462,000, last week. Economists were predicting a slightly bigger drop, according to Thomson Reuters.
The Dow Jones industrial average rose 44.51, or 0.42 percent, to 10,611.84. It is down 1.06 percent from its recent high set Jan. 19.
The S&P 500 index advanced 4.63, or 0.40 percent, to 1,150.24, above its Jan. 19 close of 1,150.23. The index now stands at its highest level since Oct. 1, 2008.
The Nasdaq composite index rose 9.51, or 0.40 percent, to 2,368.46 for its sixth straight advance.
David Joy, chief market strategist at RiverSource Investments L.L.C., said he was impressed that traders shrugged off the increase in China's inflation in a week that had few economic reports. Investors often become uneasy when there is little news. That can lead them to sell stocks.
"The concept of an economic recovery is garnering a little more credibility," he said. "We've arrived at a place where stocks are fairly valued."
The S&P 500 index's close above the January high could give some of the investors sitting out the market new incentive to pump money into stocks. The market slipped Monday and inched higher Tuesday and Wednesday. Volume has been light, a sign that traders have limited faith in the market's recent gains.
Corporate deal-making continued. Oil company BP P.L.C. will pay $7 billion to acquire exploration rights from Devon Energy Corp. BP will acquire rights to explore in Brazil, the U.S. Gulf of Mexico, and the Caspian Sea.
Increased mergers and acquisitions in recent weeks have been a sign that corporate leaders believe the economy is getting stronger.
Shares of Citigroup rose 22 cents, or 5.56 percent, to $4.18. It was a year ago this week, on March 10, 2009, that the Dow and the S&P 500 index began to pull off of one-year lows after Citigroup said it had been making money.