NEW YORK ( TheStreet) -- Stocks finished Thursday near their highs of the session, despite trading in a tight range after spending much of the day weighed by worries over rising inflation in China prompting further tightening measures there.

The Dow Jones Industrial Average went higher by 45 points, or 0.4%, to 10,612. The S&P 500 finished up 5 points, or 0.4%, to 1150, and the Nasdaq gained 10 points, or 0.4%, to 2368.

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The S&P 500 also marked its highest close since October 2008, just squeaking above the 1150.23 high reached on Jan. 19.

"We're right there. It's a critical level because it's an area that could provide some resistance," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, who also noted that March, April and May are traditional months that can see the broadest climbs. "But more than that, small-caps, mid-caps, technologies and consumer discretionary have all broken out. Our opinion isn't if it breaks out above 1150. It's when."

Though stocks finished just to the upside, news that inflation in China rose 2.7% in February weighed on the market for much of the day as investors feared further tightening measures would be enacted in response. China's February inflation level rose from an increase of 1.5% in January and marked a 16-month high.

China fears weighed particularly on global conglomerates like Coca-Cola ( KO), General Electric ( GE), 3M ( MMM) and Johnson & Johnson ( JNJ), which dragged on the Dow.

Citigroup ( C), Bank of America ( BAC) and General Electric ( GE) were the most heavily traded on the New York Stock Exchange, which had a listed volume of nearly 4.7 billion. The Dow saw volume of 150 million, compared with average volume of 200.4 million.

On the Nasdaq, shares of Sirius XM Radio ( SIRI), Huntington Bancshares ( HBAN) and Intel ( INTC) were the most heavily traded.

Financial stocks were the day's strongest, even as Senate Banking Committee Chairman Chris Dodd (D., Conn.) vowed to propose a financial reform package on Monday that aims to make the U.S. financial system and consumers less vulnerable to risky bets and products. Dodd refused to be deterred by lack of bipartisan support, saying that he believes it is important to get a proposal on the table.

For yet another day, Citigroup was the sector's big winner. Shares got a lift from optimistic sentiments by CEO Vikram Pandit , who was speaking at an investor conference today. Shares were stoked earlier this week amid "huge" demand for Citi's $2 billion in trust-preferred securities , according to Dow Jones, and as analysts offered positive takes on the firm. Citigroup gained another 5.3% to finish at $4.17 today.

Other bank stocks also finished decidedly to the upside, as the KBW Bank index climbed up 1.7%. Regional names, in particular, settled the day with some of the sharpest advances, with BB&T ( BBT), SunTrust ( STI) and Huntington Bancshares adding 2.7%, 2.2% and 3.1%, respectively.

Earlier, initial weekly jobless claims fell by 6,000 to 462,000 in the week ended March 6, which was slightly higher than the 460,000 claims that economists had been anticipating. The level compares to 468,000 previously, which was downwardly revised from 469,000.

"This morning's economic data is consistent with our expectations for our 'half-speed' economic recovery with real GDP growth downshifting from the robust 5.9% in 2009's fourth quarter to near 3% in the soon-to-be-completed first quarter of 2010," said Stuart Hoffman, PNC chief economist.

The Commerce Department's international trade report for January showed a narrower-than-expected deficit of $37.3 billion, which compares to a downwardly revised $39.9 billion in December. Economists had been expecting a deficit of $41 billion.

"The U.S. international trade gap narrowed to -$37.3 billion in January as both exports and imports declined, possibly due in part to severe weather conditions," Hoffman said in his review of the day's data. "While there is nothing in the data that points directly to the weather, a simultaneous decline in both imports and exports in the midst of a global economic recovery is a bit suspect. We do not expect that to be repeated in the months ahead."

Regarding the day's early weakness, James Dailey, senior portfolio manager of TEAM Asset Strategy Fund said, "Sentiment shifted to bullish recently and so we could suffer a relatively modest correction, but it will be more intensely felt in the small cap space."

Dailey sees value in "mega-cap" stocks like Exxon Mobil ( XOM), AT&T ( T) and Verizon Communications ( VZ): companies with strong balance sheets that pay high dividends on shares. Shares of AT&T and Verizon managed gains today, while Exxon closed flat at $67.22.

"Small- to mid-cap stocks could be reaching an intermediate-term top, and we think we're in the early stages of a rotation out of that space and into large-cap stocks," Dailey said, adding, "There's still value in the market; it's just very, very specific now and mainly in that high-quality, defensive area."

Finishing up the week's sale of $74 billion of U.S. government debt securities was a strongly supported $13 billion auction of 30-year notes. The auction had a bid-to-cover ratio of 2.89 at a high yield of 4.679%. Foreign demand, however, which is measured by indirect bids, was weak, at only 24%. Direct bids took 30%.

Prices on long-dated Treasuries rose, weakening yields. The 30-year bond strengthened 13/32, diluting the yield to 4.665% while the benchmark 10-year note slid 1/32, pushing the yield up to 3.725%. The two-year note weakened 3/32, lifting the yield to 0.951%.

President Obama announced a newly emboldened trade initiative during a morning speech, reiterating a call to double exports over the next five years to bolster job creation.

Devon Energy ( DVN) agreed to sell all of its assets in deepwater Gulf of Mexico, Brazil and Azerbaijan to BP ( BP) for $7 billion. Devon's stock added 35 cents, or 0.5%, to $72.04, while BP rose by 41 cents, or 0.7%, to $56.60.

Motorola ( MOT) reached an agreement with Microsoft ( MSFT) to use Bing search and mapping services on Motorola devices powered by Google's ( GOOG) Android.

Sony's ( SNE) motion controller for PlayStation 3, PlayStation Move , will be launched globally this fall.

In earnings news, pork producer Smithfield Foods ( SFD) swung to a profit in the third quarter, citing strong margins in its packaged meats business. Shares traded 24 cents higher, or 1.3%, to close at $19.23.

Shares of China Sunenergy ( CSUN) slipped 5.1%, to $4.06 after the company unexpectedly posted a fourth-quarter loss of 9 cents a share. Analysts had been projecting a profit of 8 cents a share.

Las Vegas Sands ( LVS) is looking to bring non-tribal casinos to Florida.

The Energy Information Administration said natural gas storage levels shed 111 billion cubic feet in the week ended March 5, which was near the high end of the range that analysts polled by Platts had been expecting, of between 108 billion to 112 billion cubic feet.

But natural gas for April delivery lost 12 cents, to settle at $4.44 per million British thermal units.

Other commodities finished largely flat, as crude oil for April delivery traded 2 cents higher to settle at $82.11 a barrel, and the April gold edged up 10 cents to settle at $1,108.20 an ounce.

The dollar was trading lower against a basket of currencies, with the dollar index down by 0.2%.

-- Written by Melinda Peer and Sung Moss in New York.