Updated with closing stock prices.NEW YORK ( TheStreet) -- Stock market gains were nearly halved in the final hour of trading Thursday, but it was still a decent day at the office. It's the power of people getting off the fence, said one market observer as the major indices rose to levels not seen in months earlier in the session. The Dow Jones Industrial Average rose 83.74 points, or 0.9%, to 9154.46, and the S&P 500 tacked on 11.6 points, or 1.2%, to 986.75. The Nasdaq Composite gained 16.54 points, or 0.8%, to 1984.3. Helping stocks along were a General Electric ( GE) upgrade, improved jobless claims and more earnings. But President Obama said late in the day that second quarter GDP figures due out Friday would indicate a contraction and that job losses remained a "huge" problem, taking some steam out of the day's rally. After a mixed close on Tuesday and mild losses on Wednesday, market watchers were beginning to wonder if "less bad" economic data and better-than-expected but still-not-exactly-good earnings were enough to maintain the energy that drove stocks higher in July. But the bulls came back refreshed early Thursday. "When it's a pullback, we say it's gone too far too fast, and when it's a rally, we say it's a buying opportunity. But the truth is there are so many skeptics on the sideline, and with each passing day, those skeptics give up, throw in the towel and come into the market," says Hugh Johnson, CIO of Illington Johnson Advisers. "It's just the force of fence-sitters in the early stages of a bull market." Helping some sitters off the fence, GE shares gained 7% to $13.12 after Goldman Sachs upgraded the stock to buy and raised its price target on a decreased likelihood that it will have to separate from its GE Capital business.
A slew of new earnings offered a mixed picture. Relatively new Dow component Travelers ( TRV) said profit fell 21%, in line with estimates, but raised its full-year outlook for operating income. Shares were down 1.6%, at $41.94. Alcatel-Lucent ( ALU) reported an unexpected second-quarter profit with help from the sale of its satellite business, sending shares up 7.5% to $2.74. On the other hand, Dow Chemical ( DOW) said it swung to a loss in the second quarter on charges and a 31% decrease in sales. Nonetheless, shares rose 6.2% to $21.53. Also, Europe's largest oil company, Royal Dutch Shell ( RDS.A), reported a 67% drop in second-quarter profit on falling energy prices and demand. "Conditions are likely to remain challenging for some time, and we are not banking on a quick recovery," said CEO Peter Voser in a statement Thursday. But crude oil futures regained $3.57 to $64.58 after falling $3.88 Wednesday on greater-than-expected increases in stockpiles. In other news, Citigroup ( C) agreed to sell its asset management operations in Japan to Sumitomo Trust and Banking in a deal that values the business at 120 billion yen ($1.26 billion). Shares fell 2.5% to $3.14. Also, Merck ( MRK) agreed to sell its 50% interest in the Merial animal health joint venture for $4 billion in cash to its venture partner Sanofi-Aventis ( SNY). Merck shares added 0.2% to $29.94, while Sanofi-Aventis edged down 0.4%, to $32.85. Stocks overseas were modestly higher. In Europe, Frankfurt's DAX and London's FTSE 100 were up 1.7% and 1.9%, respectively. In Asia, Hong Kong's Hang Seng and Japan's Nikkei added a half percentage point each.
Longer-dated Treasuries were rising in price, falling in yield. The 10-year was gaining 12/32 to yield 3.62%, while the 30-year tacked on 1-12/32, yielding 4.43%. -- Reported by Elizabeth Trotta in New York.