Wall St rises, nearing 4-year highs

Traders work on the floor of the New York Stock Exchange February 21, 2012.

NEW YORK (Reuters) - Wall Street stocks rose on Thursday after data showed the U.S. labor market remained on the mend, but the market stalled as it approached highs not seen since before the 2008 collapse of Lehman Brothers.

In an upbeat note for the economy, new U.S. claims for unemployment benefits held steady last week and were at the lowest since the early days of the 2007-2009 recession.

Thursday's gains brought the benchmark S&P 500 index near 1,370, considered the upper end of a technical barrier. The broad index has surged 8.4 percent this year and more than 20 percent from October lows, but many worry the market will soon run out of steam.

In the past four sessions, the S&P has hovered around 1,360, closing on Thursday at a 9-month high.

"You have a reluctance to buy knowing we're right up at former highs," said Todd Salamone, director of research at Schaeffer's Investment Research in Cincinnati.

But the market has also been reluctant to sell off on bad news. Some analysts say the main factor preventing a correction has been the result of a commonly used investor protection.

"The fact that we're not selling off sharply on bad news could be related to the huge amount of hedging going on," said Salamone.

One hedging strategy investors use is betting on a sudden rise in the CBOE volatility index .VIX. The VIX, as it is known, is expected to soar from its current levels if the S&P 500 retreats sharply.

Data show volume in VIX futures rose sharply to more than 100,000 contracts on separate days in the past two weeks. That volume has not been seen since the United States had its credit rating downgraded from triple-A in the week of August 2011.

The Dow Jones industrial average .DJI gained 46.02 points, or 0.36 percent, to 12,984.69. The S&P 500 Index .INX rose 5.80 points, or 0.43 percent, to 1,363.46. The Nasdaq Composite .IXIC added 23.81 points, or 0.81 percent, to 2,956.98.

According to Thomson Reuters data through Thursday morning, of the 446 companies in the S&P 500 that have reported earnings, 63 percent topped analysts' expectations. That falls below the 70 percent average beat in the past four quarters, but slightly above the average since 1994 of 62 percent.

Sears Holdings (SHLD.O) shares soared despite reporting a huge quarterly net loss, after the company reassured investors about its ability to pay down debt.

The stock of the operator of Sears department stores and the Kmart chain was up 18.7 percent at $61.80, nearly doubling in price so far this year but far from last year's high above $94.

Shares of Vivus Inc (VVUS.O) rose 78 percent as investors bet its experimental weight-loss drug would be approved by U.S. regulators.

The Nasdaq biotech index .NBI rose 2 percent.

Hewlett-Packard Co (HPQ.N) tumbled 6.5 percent to $27.05 and was the biggest drag on the Dow. Late Wednesday, the world's No. 1 computer maker posted a sharp decline in earnings and warned it would take several years to turn around its sprawling businesses.

(Reporting by Rodrigo Campos; additional reporting by Angela Moon and Doris Frankel; Editing by Kenneth Barry)