By ALEXANDRA SCAGGS

NEW YORK—More encouraging news from the labor market helped push the Dow industrials to a third straight day of fresh highs, with financial shares leading the gains.

The Dow Jones Industrial Average rose 33.25 points, or 0.2%, to 14329.49, its third consecutive session reaching a record close.

The Standard & Poor's 500-stock index tacked on 2.80 points, or 0.2%, to 1544.26. The Nasdaq Composite Index added 9.72 points, or 0.3%, to 3232.09.

Financial stocks led the charge higher, with the sector up 0.7% ahead of the Federal Reserve's first round of its latest stress-test results for banks, providing an assessment of how the group would hold up under deteriorating economic conditions. Banks far outpaced the next-biggest gainers in the S&P 500, technology and materials, which both tacked on 0.3%.

"Post-stress-test, there's hope that we see continued dividend growth" from banks, said Eric Wiegand, senior portfolio manager with U.S. Bank Wealth Management.

Two of the three biggest gainers in the Dow industrials were Bank of America (BAC) and J.P. Morgan Chase (JPM) .

In economic news, 340,000 initial claims for jobless benefits were filed in the latest week, less than the 350,000 expected. The reading comes ahead of Friday's closely watched jobs report. Wednesday, Automatic Data Processing (ADP) and Moody's (MCO) Analytics said private-sector job growth was higher than expected in February.

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Among other U.S. data, the trade deficit for January was $44.45 billion, higher than economists' projections of a $43 billion deficit. Fourth-quarter productivity fell 1.9%, more than the 1.6% expected, and fourth-quarter unit labor costs rose 4.6%, above expectations of a 4.4% increase.

The morning's data were "a bit of a mixed bag," said Barry James, president and chief executive of James Investment Research, which oversees $3.7 billion. "But I think people are trying to squeeze in [the market] any way they can."

In deal news, Time Warner (TWX) rose after it said it will spin off its entire Time Inc. magazine business, which would become an independent, publicly traded company. The decision came after a deal to merge most of the magazine group with Meredith (MDP) wasn't worked out.

Hot Topic (HOTT) jumped after the teen clothing retailer agreed to be taken private by private-equity firm Sycamore Partners for about $600 million in cash, roughly a 30% premium to Wednesday's closing price.

In Europe, the Stoxx Europe 600 edged 0.1% lower. Spain's IBEX 35 index rose 0.4% after a Spanish bond auction saw strong demand.

Asian markets were mostly lower, as investors moved to the sidelines ahead of closely watched data out of China. But Japan's Nikkei Stock Average gained 0.3% to a 4½-year high. The Bank of Japan left monetary policy unchanged, as expected, following the last meeting for Gov. Masaaki Shirakawa.

Optimism on economic growth sparked a third-straight advance to record highs for the blue chips, as financial stocks helped push indexes higher. Matt Jarzemsky reports.

China's Shanghai Composite shed 1%, after running up 3.2% over the previous two sessions, ahead of key trade data on Friday and inflation and industrial numbers over the weekend. Australia's S&P ASX 200 eased 0.2%.

Crude-oil futures jumped 1.2% to settle at $91.56 a barrel, while gold futures were mostly flat to settle at $1,574.80 a troy ounce. The dollar slipped against the euro but gained against the yen. The yield on the benchmark 10-year U.S. Treasury bond rose to settle at 1.993% as prices fell.

In other corporate news, Facebook (FB) shares gained after the social network announced a revamp of its user platform.

Dell (DELL) shares edged down after the computer maker said it received a letter from activist investor Carl Icahn proposing a special $9-a-share dividend and a leveraged recapitalization if the planned $24.4 billion buyout by founder Michael Dell falls through. Dell said it was looking for alternative proposals that might be better than a deal to go private.

Artisan Partners Asset Management (APAM), which oversees nearly $80 billion of investor assets from its base in Milwaukee, popped in its initial public offering.

PetSmart (PETM) slumped after the pet-store chain reported earnings that topped estimates, but provided an outlook on earnings and sales growth for the current year that was below analyst projections.

Retailers are generally reporting moderate growth in same-store sales results for February, according to Thomson Reuters data. Among the firms with strong results on Thursday was Costco (COST), but the wholesale retailer's shares edged lower. Off-price retailer Ross Stores (ROST) missed expectations, and shares slid.

DryShips (DRYS) declined after the dry-bulk shipper reported a wider-than-expected fourth-quarter loss and revenue that fell short of expectations, and provided a downbeat outlook for shipping markets.

Ciena (CIEN) surged after the data-equipment company reported a fiscal first-quarter adjusted profit, versus expectations for a loss, on improved gross margin and revenue that rose more than expected.

Write to Alexandra Scaggs at alexandra.scaggs@dowjones.com