The Dow Jones industrial average rose 50 points, having jumped 254 on Wednesday thanks to strong reports on manufacturing in the U.S. and China. Broader indexes also rose.
Trading was somewhat muted ahead of the government's closely watched monthly report on employment due out today.
"We're treading water," said Dan Genter, CEO of RNC Genter Capital. Traders are waiting to see if Friday's jobs data "provides more of a rescue or a shark attack."
The monthly report is likely to provide further evidence that the jobs market remains weak. Economists polled by Thomson Reuters predict the unemployment rate inched up to 9.6 percent last month from 9.5 percent in July as private employers hired just 41,000 workers last month.
With little broad conviction about the health of the economy, investors chose to target specific stocks following monthly retail sales reports and the latest acquisition activity.
"It's a trader's market," said Kenneth Polcari, managing director at ICAP Equities.
Burger King Holdings Inc. and data storage provider 3Par Inc. both rose after agreeing to be acquired. Limited Brands Inc., which operates Victoria's Secret and Bath & Body Works, got a lift from strong August sales.
The Dow Jones industrial average rose 50.63, or 0.5 percent, to close at 10,320.10.
Broader indexes also rose. The Standard & Poor's 500 index rose 9.81, or 0.9 percent, to 1,090.10, while the Nasdaq composite index rose 23.17, or 1.1 percent, to 2,200.01.
The Labor Department said first-time claims for unemployment benefits fell slightly last week, but remain well above levels that indicate a healthy economy. Claims dipped for the second straight week. They fell slightly below the level economists had forecast, which was somewhat encouraging ahead of Friday's monthly employment report.
The number of buyers who signed contracts to purchase homes rose 5.2 percent in July after hitting a record low in June, according to the National Association of Realtors. Sales plummeted in the months following the expiration of the government's home buyer tax credit in April and economists were expecting that trend to continue for a third straight month.
Factory orders also climbed, rising 0.1 percent in July. The rise in orders backs up a report Wednesday showing the manufacturing sector continues to expand. Major indexes jumped more than 2 percent Wednesday after a surprising rise in manufacturing activity.
About two stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume was very low at 3.8 billion shares.
Bond prices dipped after the economic reports. The yield on the 10-year Treasury note, which moves opposite its price, rose to 2.63 percent from 2.58 percent late Wednesday. That yield helps set interest rates on mortgages and other consumer loans.
Limited shares jumped $1.46, or 6.0 percent, to $25.73.
Shares of 3Par rose 79 cents, or 2.5 percent, to $32.87 after Hewlett-Packard Co. won a bidding war for the data storage provider. Hewlett-Packard raised its bid to $33 per share after competitor Dell Inc. offered $32 per share.
Burger King jumped $4.72, or 25 percent, to $23.58. It is being taken private for $3.26 billion, or $24 per share.
Mariner Energy Inc. shares dropped after an oil rig it owns exploded in the Gulf of Mexico. The rig was not currently producing oil. Its shares fell 59 cents to $22.76.