By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- After an initial wobble, U.S. stocks rose on Thursday, with high-growth and small-cap companies leading gains.

Analysts noted that while markets are inching higher, the disconnect between low bond yields and divergence between small-caps and large-caps is a concern for investors.

The S&P 500 (SPX) was 6 points, or 0.3%, higher at 1,894.11, with utilities and health care sector stocks leading the gains. The Dow Jones Industrial Average (DJI) added 17 points, or 0.1%, to 16,550.41. The Nasdaq Composite (RIXF) gained 24 points, or 0.6%, to 4,154.91, with biotech companies leading gains. The Nasdaq Biotechnology index was up 2.6%.

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Keith Springer, president of Springer Financial Advisors, says that Thursday gains are a continuation of the Fed minutes reaction.

"The stock market should have rallied stronger yesterday when the Fed minutes revealed that Fed is not going to take away the punch bowl any time soon," Springer said.

"But the larger issue is that the bond market -- where the 10-year yield is at 2.5%, is most likely correct to think the economy is weakening. Therefore we expect a 10%-15% correction in the stock market this summer," he added.

Jim Russell, senior equity strategist at U.S. Bank Wealth Management, says softer economic data are beginning to concern investors.

"If the economy continues to grow very tepidly by the end of the year, when the Fed has exhausted its bond-buying stimulus program, what other tools will they have to ramp up growth? That question is worrying investors more than when the rate hikes will come," Russell said.

Ahead of the market open, stock futures got a lift from strong manufacturing data out of China and Japan, however, gains quickly dissipated. By afternoon, investors shrugged off weaker-than-expected report on unemployment benefits.

New applications for unemployment benefits rose sharply in mid-May, reversing a big drop earlier in the month that put initial claims at a seven-year low.

Sales of existing homes rose 1.3% in April to a seasonally adjusted annual rate of 4.65 million, the National Association of Realtors reported Thursday, mostly in line with expectations.

The leading economic index for the U.S. ticked up in April to 101.4, the Conference Board said Thursday, while manufacturing picked up to a 3-month high in May, according to the flash purchasing managers index released by Markit on Thursday.

In earnings news, Best Buy (BBY) shares gave up earlier gains and was up 1% after the retailer's adjusted first-quarter profit beat expectations.

Dollar Tree (DLTR) posted first-quarter results that were in line with expectations. Shares rallied 7.5%.

After the market closes, Hewlett-Packard Co. (HPQ) and Gap Inc. (GPS) are among companies set to report. Best Buy, Dollar Tree, H-P are stocks to watch

Sears Holdings (SHLD) said it would close 80 stores this year as its fiscal first-quarter loss widened amid falling revenue and weak same-store sales. Shares fell 1.2%.

Shares of Williams Sonoma Inc. (WSM) rose 8.2% after the kitchenware retailer late Tuesday reported a rise in its first-quarter profit, beating forecasts.

European stocks got a boost from preliminary euro-zone PMI data that confirmed business activity in the region continued to pick up in May. In Asia, the Nikkei 225 index was the best-performing market, up 2.1% after Markit released its first-ever preliminary version of Japan's manufacturing index, which rose to a two-month high of 49.9 in May.

Gold for June delivery (GCM4) added $10 to $1,299.0 an ounce, while crude for July delivery (CLN4) eased and the dollar lost ground against the euro (EURUSD) after that upbeat PMI data.

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