Stocks rose Thursday as the prospect of a good earnings season and lower fuel prices offset mixed retail sales for March and shares of Pfizer Inc. (PFE), which fell after the drug maker agreed to suspend sales of its controversial painkiller Bextra.

The Dow Jones industrial average (search) was up 60.30 points, or 0.58 percent, to close at 10,546.32. The Standard & Poor's 500 Index (search) was up 7.07 points, or 0.60 percent, to finish at 1,191.14. The technology-laced Nasdaq Composite Index (search) was up 19.65 points, or 0.98 percent, to end at 2,018.79.

"Oil prices are slipping, and that's generally good news for the market," said Jeff Kleintop, chief investment strategist at PNC Advisors.

"But it goes beyond that. We just started earnings season and whenever we make that shift, the tone generally tends to improve," Kleintop said, adding that Alcoa and Bed, Bath & Beyond infused some optimism into the market Thursday.

Bed, Bath & Beyond (BBBY) jumped 11 percent, or $4.06, to $40.80, boosting the Nasdaq a day after the company posted fourth-quarter earnings that topped Wall Street estimates.

It was the first time in more than three months that the Dow ended higher for four straight sessions, while for the S&P, it was the first time in two months. The S&P 500 closed at its highest level in three weeks.

Most importantly for equities, U.S. crude futures for May delivery settled at $54.11 a barrel, down $1.74 on the New York Mercantile Exchange (search). The selloff came as the U.S. Energy Department on Thursday predicted that gasoline prices, now averaging $2.22 a gallon nationwide, would peak at about $2.35 a gallon this summer. Analysts noted that while demand remains strong, supplies are above last year's levels.

"It's very, very encouraging, especially at the beginning stages of earnings season, that we don't have the oil cloud hanging over our head," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. "If it holds at these levels going into earnings season ... we could end up having a pretty good month."

Pfizer, the world's largest drug maker, agreed to suspend sales of Bextra at the request of U.S. and European drug regulators, who said the risks outweigh the drug's benefits. U.S. regulators also asked that Pfizer include a black box warning -- the strongest possible -- on the package insert for its painkiller Celebrex.

Pfizer Inc. closed up 4 cents at $26.90 and dragged down shares of other drug makers. Merck & Co. (MRK), which voluntarily pulled its Vioxx drug from the market Sept. 30 after heart problems were reported in some users, gained 60 cents to $33.49.

"Obviously it's going to hurt (Pfizer). But most of the bad news is already in the sector. I don't think this news is going to kill the sector's turnaround. It's a short-term setback," said Michael Metz, chief investment strategist at Oppenheimer.

The number of Americans applying for unemployment benefits dropped by 19,000 last week, the largest decline in two months, pushing the level of claims down to 334,000 after they'd unexpectedly jumped by 23,000 last week. The four-week moving average, which smooths out week-to-week volatility, dipped slightly to 336,500, a level that suggests further improvements in the labor market.

Separately, the nation's retailers reported mixed sales for March as unusually cold weather and soaring gasoline prices offset the benefits of an early Easter holiday.

Discount retailer Target Corp. (TGT) was up 77 cents at $50.74 after reporting sales growth of 8.2 percent for March, beating the expectations of analysts. A number of teen retailers also posted better-than-expected sales, including American Eagle Outfitters Inc., which was down 64 cents at $29.54, and Bebe Stores Inc., down 24 cents at $33.76.

The world's largest retailer, Wal-Mart Stores Inc. (WMT), shed 60 cents to $48.90 after lowering its earnings forecast for the quarter due to disappointing sales growth in March; it also projected lower sales growth for April.

Shares of aluminum maker Alcoa Inc. (AA) climbed almost 5 percent to $31.41 a day after the company reported a 13 percent increase in fourth-quarter revenues and posted earnings that met Wall Street expectations.

Shares of Dell Inc. (DELL) rose 0.9 percent, or 35 cents, to $38.50 after the No. 1 personal computer maker affirmed its first-quarter outlook Wednesday, although its chief executive said growth in the personal computer industry during the first quarter appears to be slower than the company had expected.

Trading was active, with 1.49 billion shares changing hands on the New York Stock Exchange, just above the 1.46 billion daily average for last year. About 1.72 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.

Advancers outnumbered decliners on the New York Stock Exchange by a 5 to 3 and margin and nearly 3 to 2 on Nasdaq.

The Russell 2000 index, which tracks smaller company stocks, was up 3.55, or 0.58 percent, at 619.76.

Overseas, Japan's Nikkei stock average shed 0.14 percent. In Europe, France's CAC-40 added 0.42 percent, Britain's FTSE 100 rose 0.60 percent and Germany's DAX index was up 0.24 percent.

Reuters and the Associated Press contributed to this report.