Stocks rose Thursday, as investors, inspired by bullish news from FedEx Corp. (FDX) and Intel Corp. (INTC), set aside worries about budding inflation and a looming interest-rate hike and looked forward to a strong second-quarter earnings season.

The blue-chip Dow Jones industrial average (searchclosed up 41.66 points, or 0.40 percent, at 10,410.10. The broad Standard & Poor's 500 Index (searchended up 5.14 points, or 0.45 percent, at 1,136.47. The technology-focused Nasdaq Composite Index (searchrose 9.26 points, or 0.47 percent, to finish at 1,999.87.

For the week, the Dow climbed 1.6 percent, the S&P 500 advanced 1.2 percent and the Nasdaq rose 1 percent.

FedEx propped up the market as the shipping company forecast its quarterly earnings would beat already raised forecasts due to strong demand. Intel boosted the technology-laden Nasdaq after an industry group forecast a positive growth rate for semiconductors this year.

Volume was light, as it has been all week, as Wall Street wound down ahead of Friday's market closing for the funeral of former President Ronald Reagan (search).

Crude oil edged up to $38.45 a barrel on Thursday, but stayed below $42 highs of last week, which some feared would threaten the economy's steady growth.

Even though the Labor Department reported a slight rise in first-time jobless claims, the market wasn't alarmed, given that claims are still far lower than a year ago, and the number of people currently receiving unemployment insurance is at a three-year low.

The news was enough for buying to resume after Wednesday's selloff that was prompted by concerns over the Federal Reserve's (search) interest rate policy.

"I think it took a little while to figure out what the interest rate policy would be, but even if interest rates double by year's end, the economy is strong enough and stable enough to easily manage that," said Kevin Caron, market strategist for Ryan, Beck & Co. "You've got a very strong set of economic data out there, earnings are good. It's a good picture all around."

The Labor Department (search) said there were 352,000 first-time unemployment claims last week, up 12,000 from the week before but down from 424,000 in the same week a year ago. In addition, the number of people drawing unemployment insurance fell by 106,000 to 2.88 million for the week ending May 29, the lowest level since May 2001.

With unemployment steady, investors felt that was one less reason to quickly ratchet up interest rates — something Fed Chairman Alan Greenspan said this week he was willing to do if a rise in inflation warranted it. However, with inflationary data coming out next week, many investors held off from making large bets until they could get a better handle on what the Fed might do.

FedEx set the tone for the market, as the world's No. 1 air-express shipper posted strong demand for all its services and said quarterly earnings would top already heightened expectations. Its shares rose 93 cents, or 1.2 percent, to $76.94.

"We had very strong earnings, and they should be strong in the next quarter," said Owen Fitzpatrick, managing director at Deutsche Bank Private Wealth Management. "Earnings revisions are headed higher and we had a pretty quiet preannouncement period, and many companies have in fact bumped up their estimates."

Target Corp. (TGT) rose after Wednesday's announcement that it would sell its Marshall Field's stores to May Department Stores Co. (MAY) for about $3.2 billion in cash. Target shares closed up 12 cents to $45.75.

On the Nasdaq, Intel, the world's biggest microprocessor maker, gained 24 cents to $28.64. On Wednesday, the U.S. Semiconductor Industry Association forecast a stronger-than-expected 29 percent growth rate for global semiconductor sales this year to a record $214 billion, driven by demand for computers, mobile phones and other electronics.

H&R Block Inc. (HRB) rose 32 cents to $47.15 on the strength of its latest quarterly earnings report. The company beat Wall Street expectations by 7 cents per share, with higher per-client fees more than offsetting an overall drop in customers.

Boeing Co. (BA) said it has signed a multimillion dollar deal with two Chinese manufacturers to supply parts for its upcoming 7E7 Dreamliners and other jets. Boeing gained 9 cents to $48.75.

But Procter & Gamble Co. (PG) shares eased before the bell, reversing earlier gains. The consumer products company said it is comfortable with analysts' average estimate for current-quarter earnings.

A report on May U.S. producer prices has been delayed indefinitely by calculation problems, though past figures are accurate, the Bureau of Labor Statistics (search) said on Wednesday.

Trading was very light, with 1.2 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.3 billion shares were traded on Nasdaq, well under the 1.7 billion daily average last year.

Advancers outnumbered decliners 9-to-7 on the New York Stock Exchange, but were evenly matched on the Nasdaq.

The Russell 2000 index of smaller companies was up 0.54, or 0.1 percent, at 569.12.

Overseas, Japan's Nikkei stock average rose 1.1 percent. In Europe, Britain's FTSE 100 slid 0.1 percent for the session, Germany's DAX index gained 0.6 percent, and France's CAC-40 closed up 0.3 percent.

Reuters and the Associated Press contributed to this report.