Stocks log gains ahead of Friday jobs report

(MarketWatch) -- Stocks mounted a modest afternoon rally to close near the day's highs as investors awaited monthly jobs data on Friday that will shed more light on the economic recovery.

The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 10,320, +50.63, +0.49%) finished up 50.33 points, or 0.49%, at 10319.80. The Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 2,200, +23.17, +1.06%) rose 1.06% to finish at 2200.01 while the Standard & Poor's 500-stock index /quotes/comstock/21z!i1:in\x (SPX 1,090, +9.81, +0.91%) gained 0.91% to 1090.08.

Better-than-expected housing and retail data provided some encouragement to investors, but caution prevailed following Wednesday's big run-up.

If the government's jobs report falls short of already guarded expectations, "that's going to reverse what happened" on Wednesday, when stocks jumped 255 points, said John Canally, economist and investment strategist at LPL Financial.

Canally said that while economic data has come in mixed recently, "the preconditions for a double dip are not here." Strong manufacturing data on Wednesday "puts the burden of proof back on the double dippers," he said. (more)