Wall Street advanced Thursday, but the broader market was weaker than the triple-digit gain in the Dow Jones industrial average might have suggested.
In other trading, the dollar rebounded modestly against the euro but remained near a record low as traders continued to bet that the Federal Reserve will cut short-term interest rates Tuesday.
Crude oil closed above $80 for the first time.
The stock market's rally was led by blue-chip issues, particularly General Motors and McDonald's, and beaten-down financial stocks.
The Dow index, which includes GM and McDonald's, rose 133.23 points, or 1%, to 13,424.88.
GM surged $3.04 to $33.29 after the Wall Street Journal reported that United Auto Workers President Ron Gettelfinger has said he might agree to establishing a trust fund for employee healthcare costs that would be run by the union.
Later in the day, the Detroit News reported that the UAW had singled out GM as the lead company and potential strike target in labor talks with Detroit's three automakers.
McDonald's jumped $3.10 to $54.30, a record high. The company late Wednesday said it would boost its annual dividend from $1 a share to $1.50.
"It's nice to see stocks moving on positive company-specific news rather than hand-wringing over what the Fed is going to do," said Scott Vergin, a fund manager at Thrivent Financial.
Financial issues rallied after struggling mortgage giant Countrywide Financial said it lined up $12 billion in new financing. The stock rocketed $2.31 to $18.93.
But the broader market posted more modest gains than the Dow. The Standard & Poor's 500 added 12.39 points, or 0.8%, to 1,483.95.
The Nasdaq composite was up 8.99 points, or 0.4%, to 2,601.06.
Winners topped losers by about 3 to 2 on the New York Stock Exchange but had only a slight edge on Nasdaq.
The Fed continues to be the market's primary focus. The central bank is expected to cut its key short-term rate, now 5.25%, to 5% or lower Tuesday, in an effort to keep the global credit crunch from worsening.
There have been more signs in recent days that banks were becoming more willing to lend money after a freeze-up in August tied to worries about losses on high-risk mortgage-backed bonds.
Analysts noted that yields were declining on some asset-backed commercial paper, a critical short-term funding vehicle for banks.
"It seems like credit market conditions have started to stabilize somewhat," said William O'Donnell, head of U.S. interest rate strategy at UBS in Stamford, Conn.
Rising yields on longer-term Treasury bonds also suggest that the "flight to quality" last month -- investors' rush into what they consider the safest securities -- might be reversing.
The 10-year T-note yield ended at 4.47%, up from 4.41% on Wednesday.
In currency markets, the euro slipped to $1.389 from a record high of $1.391 on Wednesday. But the dollar's trend is likely to remain bearish, many experts say, because a Fed rate cut would make dollar-denominated fixed-income investments less attractive to foreigners.
Canada's dollar rose to a 30-year high against its U.S. rival, ending in New York at 96.9 U.S. cents, up from 96.5 cents.
Oil prices remained a concern for stock market bulls. Near-term crude futures edged up 18 cents to a record $80.09 a barrel in New York.
Among the day's market highlights:
* GM helped lift other auto-related stocks. Ford Motor gained 42 cents to $7.92, parts maker Magna surged $2.37 to $89 and Superior Industries added 51 cents to $20.11.
* Retail shares were strong. Target, under pressure from an activist shareholder, rose $1.70 to $64.42 after saying it would review whether to sell its $7 billion in credit card receivables as a way to boost shareholder value.
Also in the sector, Kohl's gained $3.23 to $56.50 after saying it dropped prices on its Vera Wang line of goods.
* Defense and aerospace stocks attracted buyers. Lockheed Martin rallied $2.02 to $99.64, Triumph Group rose $1.25 to $76.46 and Raytheon gained $1.17 to $62.34.
* In the financial sector, JPMorgan Chase added $1.13 to $45.60, FirstFed Financial rose $1.48 to $51.87 and Goldman Sachs jumped $5.94 to $188.47.
* San Diego-based Qualcomm gained $1.30 to $39.17. The second-biggest maker of chips that run mobile phones won an appeals court ruling letting customers import new mobile-phone models with its chips into the U.S. while it fights a trade agency's finding that the technology infringes a patent by Broadcom.
Broadcom rose 50 cents to $35.87.
* Six Flags fell for a seventh straight session, losing 18 cents to $3.28, on concerns that the amusement park operator's quarterly results will miss expectations because of weather issues in some regions.