By ALEXANDRA SCAGGS

Bank stocks led indexes on a broad march higher, as the S&P 500 marked a five-year closing high for the second time this year.

The Dow Jones Industrial Average rose 80.71 points, or 0.6%, to 13471.22. Bank of America (BAC) led the blue chips, rising 35 cents, or 3.1%, to $11.78.

Bank stocks led indexes on a broad march higher, as the S&P 500 marked a five-year closing high for the second time this year. Paul Vigna has details on The News Hub. Photo: AP.

The Standard & Poor's 500-stock index rose 11.10 points, or 0.8%, to 1472.12, as all 10 sectors advanced. The Nasdaq Composite Index rose 15.95 points, or 0.5%, to 3121.76, its highest level in three months.

Financial shares notched the biggest gains in the S&P 500 ahead of Wells Fargo (WFC)'s earnings report on Friday. Wells gained 69 cents, or 2%, to 35.40. The KBW Bank Index, which track's 24 of the country's biggest banks, rose 1.3%.

"The world is thinking that fourth-quarter numbers may be not as pessimistic as would have been expected two or three weeks ago. We will see," said Peter Tuz, president of Chase Investment Counsel, which manages about $600 million out of Charlottesville, Va.

Morgan Stanley (MS) rose 72 cents, or 3.7%, to 20.34, after bank analyst Mike Mayo, of CLSA, noted that activist investor Dan Loeb, of hedge fund Third Point, picked up a new stake in the bank. Also among gainers was Prudential Financial (PRU), which advanced 1.59, or 2.8%, to 57.90, after it nabbed two "buy" ratings from Wall Street analysts this week.

In the U.S., initial claims for unemployment benefits in the latest week were higher than expected, but continuing claims—those drawn by workers for more than a week—dropped to the lowest level since 2008. And jobless claims for the week ending Dec. 28 were adjusted lower.

"The guts of the report showed that the labor market could be improving, especially when you look at continuing claims," said Andrew Wilkinson, chief economic strategist with Miller Tabak & Co.

Meanwhile, China's trade surplus in December increased from the month before, boosted by a bigger-than-expected jump in exports from year-earlier levels, a sign that China's recovery may be picking up steam.

"The [economic] slowdown in China may now be behind them. Today's report was more evidence of that," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors, which oversees $7.2 billion in assets.

Asian markets gained in response to the China news. Japan's Nikkei Stock Average climbed 0.7%, as exporters received a lift from a decline in the yen. Hong Kong's Hang Seng Index rose 0.6% and South Korea's Kospi climbed 0.8%.

The Stoxx Europe 600 declined 0.3%, but shares in Spain and Italy edged higher after strong debt auctions. Spain's IBEX 35 index rose 0.2%, while Italy's FTSE MIB index climbed 0.7%. The European Central Bank and Bank of England left interest rates unchanged, as widely expected.

Gold gained 1.4%, to $1,677.30 a troy ounce. The dollar fell against the euro and edged higher against the yen. The yield on the 10-year Treasury note rose to 1.894% as prices fell.

In corporate news, Tiffany (TIF) declined 2.86, or 4.5%, to 60.40. The high-end jewelry retailer said it expects earnings for the full fiscal year to be at the low end of its range, given lackluster holiday sales.

Molycorp (MCP) slumped 2.45, or 23%, 8.34, after the rare-earth mining company said it expects 2013 revenue and cash flow to be lower than anticipated.

Facebook rose 71 cents, or 2.3%, to 31.30, building on recent gains. The stock rose 5.3% on Wednesday and has climbed 15% this month.

Supervalu (SVU) rallied 43 cents, or 14%, to 3.47, after it struck a deal to sell five of its grocery-store chains to a group of investors led by Cerberus Capital Management. It also reported a continuing decline in sales.

Nokia (NOK1V.HE) jumped 70 cents, or 19%, to 4.45, after it said it anticipates better-than-expected fourth-quarter earnings, thanks to brisk sales of its new Lumia smartphone lineup.

Aéropostale slid 13 cents, or 1%, to 13.24, after holiday sales slumped from 2011. It cut its earnings forecast for the fourth quarter.

Herbalife (HLF) declined 71 cents, or 1.8%, to 39.24, as the battle has heated up between two hedge funds, one that owns an 8.2% stake in the company and another that has bet more than $1 billion that the stock would fall.

Ford Motor (F) climbed 36 cents, or 2.7%, to 13.83, after the car maker doubled its quarterly dividend to 10 cents a share, citing a solid balance sheet.

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