A rally in the final hour of trading helped U.S. stocks register slim gains Thursday and pushed the Standard & Poor’s 500 index and NASDAQ to 18-month highs even as latest economic releases from U.S. and China and crippling strikes on Greek streets disappointed investors. 

The Dow Jones industrial average gained 44.51 points, or 0.4%, to 10,611.84.  The broader S&P 500 index advanced 4.63 points, or 0.4%, to 1,150.24, its highest close since October 1, 2008.  The NASDAQ composite index rose 9.51, or 0.4%, to 2,368.46 for its sixth straight session advance.  On the New York Stock Exchange advancing shares beat decliners by a three-to-two margin on volume of 983 million shares. 

China inflation data further disappointed investors who were looking for positive signs about the directions of the economy.  Investors were concerned as a spiking inflation could prompt China to hike interest rates.  China, one of the fastest-growing economies in the world, reported its inflation rate rose to 2.5% in February from 1.5% in January. 

Mergers and acquisitions continued.  British oil giant BP PLC (NYSE:BP) said it agreed to acquire Devon Energy’s (NYSE:DVN) certain oil assets in Brazil, the Gulf of Mexico and Azerbaijan for $7 billion in cash. 

Financial shares rallied on Citigroup (NYSE:C) CEO Vikram Pandit’s bullish remarks that the bank is on a path toward sustained profitability.  Pandit’s comments sent shares in the bailed out firm up 5.5%.  Health care stocks also strengthened as speculation grew passage of proposed healthcare reforms by President Obama would be difficult.

Of the 30 DJIA components, 25 ended the day in the green.  IBM (NYSE:IBM) and Merck (NYSE:MRK) led the gainers, both up 1.6%, while 3M (NYSE:MMM) Coca-Cola (NYSE:KO) and General Electric (NYSE:GE) closed down 0.4%, 0.3% and 0.2%, respectively.

On the S&P500, 335 stocks advanced.  All ten sectors recorded gains, led by financials (+0.9%), health care and telecommunications (+0.5%), tech and consumer services (+0.4%), basic materials and utilities (+0.3%), industrials (+0.2%), consumers goods (+0.1%), and oil and gas (+0.01%).

The US dollar dropped 0.3% against a basket of currencies.  Bond prices declined with the yield on the 10-year notes rising to 3.74% from 3.72% late Wednesday.  The Vix volatility measure eased 2.8% to 18.06, indicating investors were less fearful now.

Today sees Apple’s (NASDAQ:AAPL) initial iPad order books opening for business, and advance retail sales and a consumer confidence gauge due for release.  News of Bernanke-friendly Yellen’s nomination to replace Kohn as Fed Vice Chairman adds ammunition to assumptions of continuing dovish policy measures.

Zacks Investment Research