NEW YORK: Stocks rose for the third straight day on Thursday, sparked by results from Bank of America and Morgan Stanley and as the latest jobless claims dropped to a near four-year low.

The SandP 500 hit a fresh five-month high, with the industrials, consumer discretionary stocks and financials leading gains.

Tech shares advanced ahead of earnings from a number of bellwethers expected after the close.

But reports after the bell were mixed. Google fell short of Wall Street's lofty expectations, and its shares dropped 10 percent to US$575.50.

"Google was the big disappointment because so much of their emphasis is developing products, specifically Android, where more dollars are going out than they anticipated," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

In the regular session, Bank of America Corp climbed 2.4 percent to US$6.96 after it reported it swung to a fourth-quarter profit from a year-ago loss. Morgan Stanley reported a loss that was narrower than expected, sparking a 5.4 percent jump in its stock to US$18.28.

"We think (financials) have pretty much bottomed here in the U.S.," said Paul Simon, chief investment officer at Tactical Allocation Group in Birmingham, Michigan.

"They represent some compelling value. We think a lot of the bad news has been discounted, and you've seen stock prices rallying in the beginning of the year," said Simon, whose firm has been buying financials.

Financial shares have rallied since the start of the year. The SandP financial index is up 8.1 percent so far for 2012, helping to push the SandP 500 up 4.5 percent for the year.

In the latest snapshot of the U.S. economy, data showed the number of Americans filing for new jobless benefits dropped to nearly a four-year low last week. It added to views that the economy is slowly moving forward.

The Dow Jones industrial average rose 45.03 points, or 0.36 percent, to end at 12,623.98. The Standard and Poor's 500 Index gained 6.46 points, or 0.49 percent, to 1,314.50. The Nasdaq Composite Index climbed 18.62 points, or 0.67 percent, to close at 2,788.33.

Volume totaled about 7.6 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 6.68 billion, and the highest since December 16.

Advancing stocks outnumbered declining ones by a ratio of about 2 to 1 on the New York Stock Exchange. On the Nasdaq, nearly three stocks rose for every two that fell. -- Reuters