Updated with closing prices.

NEW YORK ( TheStreet) -- The major indices closed near their highs of the day Thursday, extending gains on a mix of economic and corporate news in a market that one observer calls "a technical trader's dream."

The Dow Jones Industrial Average rose 80.26 points, or 0.8%, to 9627.48, while the S&P 500 added 10.77 points, or 1%, to 1044.14. The Nasdaq Composite advanced 23.63 points, or 1.2%, to 2084.02.

Shortly after the close, Morgan Stanley ( MS) announced that Co-President James Gorman become the firm's CEO Jan. 1, replacing John Mack, who will continue to serve as chairman.

Helping spur enthusiasm early in the day, Yahoo! ( YHOO) shares added almost 4.5% after an upgrade by Bank of America to buy from neutral. Also, Procter & Gamble ( PG) climbed 4.2% after lifting its profit outlook to account for the sale of its pharmaceutical unit and forecasting 1% to 4% of organic sales growth, on an adjusted basis.

Stocks have surprised some market observers by extending gains this week after a three-day weekend on light volume. But there isn't a lot of driving force in terms of buying activity coming from the institutional side just yet, says Anu Sharma, managing director of the market intelligence desk at Nasdaq OMX. While longer-term traders are sitting on their hands, it's "a technical trader's dream," he says.

"There's a little underlying nervousness amongst a lot of investors who are still trying to get a handle on why this market moves higher with earnings and a lot of economic news already priced in," says Sharma. "We've had this tremendous rally, but it seems to be a little empty of late, and when you have a marketplace that's pretty much 60% to 65% traded through algorithm and hi-fi trading, that's the result -- these algorithms kick in and drive momentum."

Adding to vibes that came with four previous days of gains, economic data implied improvement in unemployment trends. Initial jobless claims fell by 26,000 to 550,000, 10,000 below expectations. Continuing claims also fell more than expected, by 159,000 to 6.09 million.

Greater signs of improvement came from yesterday's beige book, in which eight of 10 districts reported a pickup of hiring of temps, one of the early indicators of a stabilizing labor market, said Burt White, chief investment officer at LPL Financial. "Mix that with these declining initial claims, and I think this confirms to us that the improvement is definitely under way."

White believes we may be headed toward zero job losses, or even creating jobs as early as the end of the year or early 2010.

Click below to hear my entire conversation with White on job losses, the deficit, and what he thinks is a threat to the recovery.

(What do you think is the biggest threat to the economic recovery? Post a comment and let us know.)

Wall Street also had an eye on the Treasury's auction of $12 billion in 30-year notes Thursday. The auction saw the strongest demand since November 2007 and followed the sale of $38 billion in three-year notes and $20 billion in 10-year bonds earlier this week, both with greater than average demand.

In other data Thursday, the trade deficit for July rose 16.3% to $31.96 billion. Economists had anticipated a lesser deficit of $27.3 billion, slightly greater than June.

Corporate earnings outlooks were mixed. Monsanto ( MON), the world's biggest seed company, said earnings for the fiscal year ended Aug. 31 were at the low end of its previous forecast range of $4.40 to $4.50. Shares fell 5% to $79.30.

Texas Instruments ( TXN), meanwhile, said after Wednesday's close that it expects profit and revenue above analyst expectations in the third quarter. Its shares were off by 0.6% at $25.

In other news, OPEC decided to leave its production targets unchanged for the third time this year. Crude oil futures rose 63 cents, to $71.94.

Stocks in Asia were mostly higher. The Nikkei in Japan added 2%, and the Hang Seng in Hong Kong advanced 1.1%.

Stocks in Europe were mixed. London's FTSE 100 lost 0.3% but the DAX in Frankfurt added 0.4%.

-- Written by Elizabeth Trotta in New York.