Wall Street continued its "Santa Claus" rally Thursday after durable goods data pointed to a healthy pace of activity in the nation's factory sector, but a plummeting dollar and signs of weaker consumer spending limited gains.

The Dow Jones industrial average (search) added 11.23 points, or 0.10 percent, to close at 10,827.12. The Standard & Poor's 500 Index (search) was up just 0.56 of a point, or 0.08 percent, to end at 1,210.13. The technology-laced Nasdaq Composite Index (search) gained 3.59 points, or 0.17 percent, to finish at 2,160.62.

"Right now, there's just no selling going on," said Todd Leone, managing director of equity trading at SG Cowen Securities. "There's a lot of money being put to work before the end of the year, and I think that despite whatever news we get, we'll just continue drifting up."

Stocks rallied through the holiday-shortened week, with investor optimism remaining high. The Dow reached new 3 1/2-year highs for three straight sessions, while the S&P saw its second straight high. The Nasdaq, struggling with disappointing earnings and outlooks from technology firms, failed to break the multiyear high set last Wednesday.

For the week, the Dow rose 1.66 percent, the Nasdaq advanced 1.19 percent, and the S&P 500 gained 1.33 percent.

"It was typical holiday type trading," said Robert Basel, managing director of Citigroup Global Markets. "There just weren't a lot of people around." Over the last few days, the market has seen money being put to work from the sidelines, which has helped fuel the year-end rally, Basel said.

The stock market is closed Friday for the Christmas holiday, which left many trading desks thinly staffed Thursday.

The market's move higher on Thursday came as economic data offered a mixed picture.

A Commerce Department (search) report showed U.S. durable goods orders jumped 1.6 percent in November, pointing to a healthy pace of activity in the factory sector

The University of Michigan's (search) final reading of its December index of consumer sentiment rose to a higher-than-expected 97.1.

But consumer spending edged up a slim 0.2 percent in November, as purchases of new cars dropped sharply, a government report said.

"What you have is kind of a mixed bag," said Phil Flynn, senior market analyst at Alaron Trading Corp. "Obviously, the durable goods number is extremely encouraging because that rise blew away market expectations.

The small gain in consumer spending, however, was cause for concern because it's a sign that "consumers may be tightening up their wallets in the heat of the all-important holiday shopping season," Flynn said.

In other economic news, initial claims for U.S. jobless benefits rose to 333,000 last week -- exceeding Wall Street economists' forecast for 330,000 claims. Meanwhile, November sales of new U.S. homes tumbled 12 percent, the sharpest rate in more than a decade.

Masonite International (MHM), which has agreed to a $2.5 billion takeover offer from U.S. buyout firm KKR, saw its shares jump 17 percent to $33.36 after analysts said the company may draw competing bidders and a sweetened offer.

Masonite shares surged 16.7 percent, or $4.78, to $33.36 on news of the KKR offer, while shares of accounting and business services firm Resources Connection Inc. jumped 14 percent, or $6.50, to $53.10 after the company said quarterly earnings more than tripled.

Shares of General Motors Corp. (GM) fell 0.77 percent, or 31 cents, to $39.83 after U.S. safety regulators said the company will recall 717,302 minivans because passengers could hurt their arms or wrists when opening a power sliding door.

American Greetings Corp. (AM) fell 13 percent to $24.25 after reporting that weak sales in its retail and seasonal gift wrap business dragged down quarterly profit from operations.

A number of technology firms announced their earnings late Wednesday. Memory chip manufacturer Micron Technology Inc. (MU) saw its first-quarter profits rise substantially, earning 23 cents per share compared with just a penny per share a year ago. The company beat Wall Street estimates by a penny per share, but its revenues were lower than expected. Micron lost 8 cents to $11.80.

PalmSource Inc. (PSRC) dropped 45 cents to $12.78 after the handheld software maker said it swung to a profit in the second quarter, but added that that profits in the third quarter would be lower than Wall Street had estimated.

Computer software maker Red Hat Inc. (RHAT) saw its profits jump 55 percent in the quarter, meeting Wall Street's profit expectations. However, the company's shares fell $2.04 to $13.03 as the Linux distributor missed its revenue targets.

Trading was light, with almost 1 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.4 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.

Advancing shares led declining shares by a margin of 9 to 7 on the Big Board, while advancers led decliners by a similar margin on the Nasdaq.

The Russell 2000 index of smaller companies was up 0.63, or 0.1 percent, at 649.09.

Overseas, Japan's Nikkei stock average gained 0.75 percent. In afternoon trading, Britain's FTSE 100 was down 0.01 percent, Germany's DAX index rose 0.09 percent, and France's CAC-40 climbed 0.22 percent.

Reuters and the Associated Press contributed to this report.