The Dow Jones industrial average (INDU) added 46 points, or 0.4%, the S&P 500 (SPX) rose 6 points, or 0.5%, the Nasdaq composite (COMP) increased 19 points, or 0.7%. All three indexes closed at the highest levels since July.
"The positive bank results were really unexpected," said Tyler Vernon, chief investment officer at Bilmore Capital. "The past six months have been a terrible environment for banks, but it looks like things are getting better, which is generally better for the economy, too."
Meanwhile, the government released an onslaught of economic data, including reports on housing, unemployment claims and inflation. Investors were encouraged as initial jobless claims fell to their lowest level in nearly four years, in another sign of improvement in the long-suffering labor market.
However, concerns that the sharp drop may be one-time blip rather than a start of a new trend kept a lid on gains, said Vernon.
"Traders are concerned about seasonality factors, and worried that claims could return to the status quo over the next couple of weeks, so they'll wait to see what happens," he said.
The dollar fell against the euro and British pound, but edged higher against the Japanese yen.
Oil for February delivery slipped 20 cents to settle at $100.39 a barrel.
Gold futures for February delivery ticked down $5.40 to settle at $1,654.50 an ounce, losing momentum from earlier gains.
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