Reuters Oil's spike, retail and jobless data lift Wall Street

NEW YORK (Reuters) - U.S. stocks racked up gains across a wide array of sectors on Thursday, aided by rising commodity prices and improving labor market conditions, along with a sharp drop in interest rates.

But stocks faded late in the session as analysts said the recent pattern of light volume has made it difficult for the S&P 500 to close above the psychologically important 950 level.

Energy shares helped lead the advance after the International Energy Agency raised its demand forecast for the first time in 10 months. Crude oil surged briefly to more than $73 a barrel and lifted shares of resource companies, such as Chevron (CVX.N), up 2.4 percent at $71.90 and Alcoa (AA.N), up 6.4 percent at $12.22. An S&P index of energy stocks gained 1.8 percent.

But energy shares weren't Wall Street's only climbers. An

upgrade of some regional banks by analysts at Goldman Sachs and a separate upgrade of Bank of America (BAC.N) lit a fire under banking shares. The KBW bank index .BKX shot up 2.6 percent.

The stock market has rallied since hitting 12-year lows in early March, with the S&P rising 39.7 percent. However, stocks have failed to substantially build on those gains since mid-May, while an expected correction has yet to materialize.

Rising energy costs are now being viewed in a positive light by investors as a signal of renewed demand. Recent concerns about large debt auctions have been shrugged off, with a big rally in the bond market on Thursday as the Treasury sold $11 billion of 30-year bonds.

"Isn't that typical? The more you look for something, the less likely it is going to appear, at least as far as the market is concerned," said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.

"That's why it keeps going up. There's a lot of worry. The market climbs a wall of worry, right?"

The Dow Jones industrial average .DJI gained 31.90 points, or 0.37 percent, to 8,770.92. The Standard & Poor's 500 Index .SPX rose 5.74 points, or 0.61 percent, to 944.89. The Nasdaq Composite Index .IXIC added 9.29 points, or 0.50 percent, to 1,862.37. more...