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Late Thursday, Wall Street ended on a positive note, extending its recent rally as investors digested fresh economic data that offered mixed signals about the Federal Reserve’s potential path forward.

The S&P 500 rose 0.5%, continuing its upward momentum and finishing near session highs. Technology stocks once again led the charge, with the Nasdaq Composite advancing 0.8%. The Dow Jones Industrial Average gained 0.3%, adding to its record-setting performance from earlier in the week.

Market participants focused on the latest batch of economic indicators, which painted a complex picture of the U.S. economy. Initial jobless claims fell to 217,000 for the previous week, coming in below economist expectations of 220,000. The unexpected strength in the labor market prompted some analysts to question whether the Fed might need to maintain higher interest rates for longer than previously anticipated.

“The resilience in employment data continues to challenge the narrative of an imminent economic slowdown,” said Michael Peterson, chief economist at Capital Market Strategies. “While this is positive for consumer spending, it complicates the Fed’s inflation-fighting efforts.”

Meanwhile, the Philadelphia Fed Manufacturing Index showed contraction for the fourth consecutive month, registering at -2.8 compared to the -1.5 reading economists had forecast. The persistent weakness in manufacturing activity suggests that certain sectors of the economy are still feeling the impact of elevated interest rates.

Treasury yields moved higher following the data releases, with the benchmark 10-year yield climbing to 3.87%, its highest level in three weeks. The 2-year yield, more sensitive to near-term Fed policy expectations, rose to 4.21%.

Energy stocks performed well as crude oil prices rebounded, with West Texas Intermediate futures gaining 1.2% to settle at $76.84 per barrel. The increase came after the International Energy Agency revised its demand forecast upward for the remainder of the year, citing stronger-than-expected consumption in emerging markets.

“The energy sector is finding support from both supply constraints and resilient global demand,” noted Sarah Johnson, commodities strategist at Global Market Advisors. “OPEC+ production cuts continue to provide a floor for prices despite broader economic uncertainties.”

Financial stocks also outperformed as regional banks rallied following positive analyst commentary about the sector’s improving fundamentals. The KBW Bank Index rose 1.7%, reaching its highest level since March.

In corporate news, semiconductor equipment maker Applied Materials gained 3.8% after reporting better-than-expected quarterly results and issuing an optimistic outlook that pointed to sustained demand from AI-related infrastructure investments. The company’s performance offered further evidence that spending on artificial intelligence remains robust despite broader concerns about technology investment.

“The AI theme continues to be a major catalyst for the market,” said Robert Chen, technology analyst at Meridian Securities. “Companies with clear exposure to this trend are commanding premium valuations, and rightfully so given the growth prospects.”

Retail giant Walmart declined 1.2% despite posting strong quarterly earnings, as investors took profits following the stock’s recent outperformance. The company raised its full-year guidance but noted that consumers remain cautious about discretionary spending.

Looking ahead, market participants will closely monitor upcoming speeches from Federal Reserve officials for clues about the central bank’s thinking on interest rates. Fed Governor Christopher Waller is scheduled to speak Friday morning, while Chicago Fed President Austan Goolsbee will deliver remarks in the afternoon.

Trading volume remained relatively light, typical for mid-August when many market participants take vacations. This reduced liquidity could potentially amplify price movements in the coming sessions, analysts cautioned.

As earnings season winds down, investors are increasingly focusing on macroeconomic factors and Fed policy expectations to guide their investment decisions through the traditionally volatile late summer and early fall period.