The Dow Jones Industrial Average advanced 30.90 points, or 0.4 percent, to 8,577.68.
"The same concerns of the market exist, such as the durability of corporate profits, when the recovery in Asia is going to occur, and what's happening in Washington," said Joseph Battipaglia, chief investment strategist at Gruntal & Co. "But the market clearly will not advance to new highs with a broad rally until there's some conviction that the future looks very bright."
The market's behavior was a relief to many, following the wild gyrations of Tuesday and Wednesday.
"Everybody's sitting and waiting, either for the next shoe to drop, or to make sure that the next shoe isn't going to drop," said Arnie Owen, managing director of equities at Cruttenden Roth.
"People are sensing that maybe the worst is over for some of these tech issues," Owen said. "Professional investors need an excuse to take profits and they created one for themselves [in the White House situation].
"As far as I can see, the underlying economy is still growing nicely, we're still in a noninflationary environment, and it doesn't look like we're going to see higher interest rates for awhile. And that's positive for stocks."
Retail stocks were the day's star performers, fueled by strong July sales results. The technology sector also fared well, as bargain hunters streamed into beaten-down computer-related shares, disk-drive and semiconductor makers.
In a welcome change, smaller shares outperformed blue-chip issues.
Overseas, mounting concerns that China might devalue its currency, the yuan, pushed Asian stock markets lower. The fear is that a Chinese devaluation may ignite another round of currency devaluations across Asia, as other nations seek to make their goods and services more competitive in price.
Hong Kong's Hang Seng index dropped 2.8 percent to its lowest level since January 1995.
In Thursday's market highlights:
- The Standard & Poor's 500 Index rose 0.8 percent.
- New York Stock Exchange winners held a 17-to-13 edge over losers. New 52-week highs amounted to 306, while there were 17 stocks making new 52-week lows.
- On the Big Board floor, turnover eased 11 percent to 765 million shares.
- The Nasdaq Composite advanced 2.3 percent. Advancing issues led decliners by 26 to 17 in the Nasdaq Stock Market. Volume totaled 769 million shares.
- The Russell 2000 Index of small-capitalization stocks rose 2.0 percent.
- In the bond market, prices barely budged as traders awaited Friday's July employment report. The 30-year Treasury sank 1/32, to yield 5.672 percent.
- Service Corp. International said it will buy fellow funeral services interest Equity Corp. International for $27 a share in stock. The combined company will operate approxmately 3,600 funeral homes, with annualized revenues approaching $3 billion. Service Corp. shares fell 2 3/8 to 36 3/8, while Equity Corp. stock rose 2 13/16 to 24 15/16.
- United Healthcare lost 15 1/2 to 37 3/8. The biggest U.S. managed-healthcare concern said it earned 66 cents a share on an operating basis in the second quarter, in line with most expectations. But Medicare premiums charged by the company are not enough to cover costs in the majority of its Medicare markets. Humana, which agreed to buy Humana in a $5.5 billion stock swap, shed 8 7/8 points to 16 7/8.
- Uniphase gained 5 7/8 to 52. The fiber optic telecommunications equipment maker bettered Street estimates by a penny with its fiscal fourth-quarter operating profits of 26 cents a share.
- American Express fell 7 3/8 to 101 1/8 after Chairman Harvey Golub said the Asian crisis has hampered almost every financial concern that does business overseas. Golub also said that Asia's effects would probably hinder his company's ability to reach some of its financial objectives.
- Medtronic fell 5 7/8 to 53 1/2. The medical instruments manufacturer warned that its fiscal first-quarter results will come in below the expectations of most analysts.
- Stage Stores plunged 13, or 55 percent, to 10 1/2. The Houston-based apparel retailer said third-quarter earnings will likely undercut most estimates due to harsh weather conditions.
- CD Radio vaulted 5 3/16 to 27 15/16. Bear Stearns started coverage of the satellite broadcaster with a "buy" rating.