The S&P 500 rose for a fourth session on Thursday after a report suggested improvement in the labor market ahead of Friday's closely watched monthly payrolls report.
The number of Americans filing new claims for unemployment benefits rose only slightly last week after a big drop the week before, keeping in place a trend that indicated a mild improvement in the labor market.
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"The claims data was actually OK, with two weeks in a row now below 370,000, after two weeks prior above 380,000," said Peter Boockvar, equity strategist and portfolio manager at Miller Tabak in New York. "We await obviously tomorrow's payrolls number."
Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 367,000, the Labor Department said, below economists' expectations for an increase to 370,000.
Coal companies' stocks rallied following Republican presidential nominee Mitt Romney's support of the coal industry during his televised debate with President Barack Obama on Wednesday night.
"By the way, I like coal," Romney said in the debate.
At midday on Thursday, shares of Arch Coal rose 7.1 percent to $6.64 and shares of Alpha Natural Resources gained 5.2 percent to $6.63.
The Dow Jones industrial average climbed 79.33 points, or 0.59 percent, to 13,573.94. The Standard & Poor's 500 Index rose 8.34 points, or 0.57 percent, to 1,459.33. The Nasdaq Composite Index gained 6.10 points, or 0.19 percent, to 3,141.40.
Financial shares led the market higher after Draghi said the ECB was ready to buy the bonds of euro-zone countries that ask for it, leaving the door open to a widely expected bailout of Spain. The S&P's financial index gained 1.3 percent.
Draghi, speaking at a regular monthly news conference, also said "significant progress" had been made in Spain to bring order to its finances, although more was needed.
The S&P 500 has climbed 16 percent so far this year. That strong gain, combined with weak global economic data and questions of whether Spain's bailout will come to pass, have prompted some investors to say the rally is starting to look overextended.
"We've enjoyed this surge in the U.S. based on monetary policy, but at some point, we're going to need something a little more tangible to sink our teeth into to sustain higher equity prices," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago.
The weaker dollar lifted the prices of crude and basic metals, which helped buoy shares in the energy and materials sectors. An S&P index of energy shares rose 0.8 percent, while an S&P index of materials shares gained 1.3 percent.
Shares of Dow component Hewlett-Packard fell 0.2 percent to $14.88, adding to Wednesday's 13 percent drop after Chief Executive Meg Whitman warned of an unexpectedly steep earnings slide in 2013.
Data showed U.S. retailers' September sales looked solid as shoppers wrapped up back-to-school buying and put the brakes on more big spending before the holiday season.
Costco Wholesale shares rose 1.6 percent to $101.23 after it reported a better-than-expected 6 percent rise in September sales at stores open at least a year.
On investors' watch list this afternoon: The Federal Reserve is expected to release the minutes from the September 12-13 meeting of its policy-setting Federal Open Market Committee at 2 p.m. EDT (1800 GMT).
(Editing by Jan Paschal)