By Ben Rooney
NEW YORK (CNNMoney.com) – Stocks rose Thursday, with the major gauges breaking through key technical levels, after upbeat reports on the labor market and durable goods orders fueled optimism about the economic recovery.

The Dow Jones industrial average (INDU) was up 46 points, or 0.4%, with about one hour left in a holiday-shortened session. The S&P 500 index (SPX) rose 4 points, or 0.4%. Both gauges are on track to close at fresh 14-month highs. The Nasdaq composite (COMP) gained 13 points, or 0.6%. The tech-heavy index closed at a 15-month high Wednesday.

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The advance comes after the government said the number of Americans filing first-time claims for unemployment fell more than expected last week. A separate report showed orders for durable goods outside of the transportation sector surged last month.

“Today is about as quiet as it gets and you still have the S&P making a new yearly high,” said Art Hogan, chief market analyst at Jefferies & Co. “This is a market that’s focusing on what next year is going to look like.”

Stocks were also supported by rising oil prices, which lifted shares of energy companies. Gold prices rose as the dollar softened against the euro.

“The strong commodity complex continues to be a driver of the market,” Hogan said.

Meanwhile, investors showed little reaction to the Senate’s 60-39 vote to pass the health care bill, which was widely expected to be approved. The Senate also passed a $290 billion increase to the amount of debt the Treasury is permitted by law to have, raising the debt ceiling to $12.394 trillion from $12.104 trillion.

Trading volume has been light this week, with many market participants away on vacation. Floor trading on Thursday will end at 1 p.m. ET. The market will remain dark Friday for the Christmas holiday.

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Peter Cardillo, chief market economist for Avalon Partners, said he expects the market to continue drifting higher next week, a period of the year when stocks traditionally perform well, helped largely by low trading volumes.

“The Santa rally is going to continue,” he said.

The gains come near the end of a strong year for the stock market. After bottoming at 12-year lows in March, stocks have rallied broadly as a flood of government stimulus money has helped the economy emerge from one of the deepest recessions on record.

For the year, the major indexes are all on track to post double-digit percentage gains. The Dow has gained over 19% so far this year, while the S&P 500 is up about 24% year to date. The Nasdaq has been the best performer of 2009, climbing about 44%.

Economy: A government report showed the number of Americans filing first-time claims for unemployment insurance fell by 28,000 last week to 452,000 initial claims.

The tally was much better than expected. Economists surveyed by Briefing.com had forecast the number of first-time filers to fall to 470,000 from the previous week’s 480,000 new claims.

Separately, the Commerce Department released its report on durable goods orders, showing a gain of 0.2% in November which fell short of market expectations.

Economists had projected that new orders for long-lasting manufactured goods rose 0.4% in November after a decline of 0.6% the previous month.

Excluding transportation, however, durable goods orders surged 2%, far exceeding the 1% rise economists had expected.

Overall, the durable goods report is a “good sign” for the economy, Hogan said. “The headline number is extremely volatile, but when you take out the transportation part, you have improvement on sequential basis.”

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World markets: Asian markets posted gains for the day. Japan’s Nikkei average rose 1.5% to close at its highest level since late September. European indexes closed higher, with London’s FTSE gaining 0.5%.

Bonds: The price of the benchmark 10-year note fell, driving the yield up to 3.76%.

Money and oil: The dollar was mixed against major currencies. It was down versus the euro, but edged up against the yen and the UK pound.

Crude oil rose 58 cents to $77.25 a barrel. This is after strong gains on Wednesday, on a report showing that crude supplies fell more than twice as much as analysts projected, for the second week in a row.

Gold for February delivery rose $10 to $1,104 per ounce.

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