The U.S. stocks rebounded on Thursday after the latest bunch of economic data affirmed the U.S. economy is picking up.

The Nasdaq was within a few points of the 3,000 milestone on Thursday, while the Dow continued to hover around the 13,000 mark.

When the market closed, the Dow Jones industrial average gained 28.23 points, or 0.22 percent, to 12,980.30. The Standard & Poor's 500 was up 8.41 points, or 0.62 percent, to 1,374.09. The Nasdaq Composite Index rose 22.08 points, or 0.74 percent, to 2,988.97.

Thursday's data continued to boost confidence in financial markets. The U.S. Labor Department said early in the morning that the number of people applying for jobless benefits decreased 2,000 to a seasonally adjusted 351,000 last week, holding the four-year low level.

The four-week average extended its long convincing trend downward, falling 5,500 to 354,000, also its lowest level in nearly four years.

Meanwhile, U.S. personal income gained 0.3 percent in January, according to the U.S. Commerce Department.

Also lifting the market, retail sales came in better than analysts had expected, another proof that the recovery is gaining momentum.

However, a separate report from the Institute for Supply Management showed its purchasing manager index fell unexpectedly, limiting the gains in the market.

Investors continued to focus on the testimony by Federal Reserve (Fed) Chairman Ben Bernanke in front of the Senate Banking Committee. The Fed chief did not signal another round of quantitative easing in his testimony in the House previous day, which disappointed some investors, who had expected the Fed to be more aggressive.

In day two of his semi-annual testimony before the Congress, the central bank head warned lawmakers that their short-term policies could put the recovery at risk.

"I think it is important that we keep in mind that the recovery is not yet complete, unemployment remains high, the rate of growth is modest," he said.

In other markets, the U.S. dollar traded mixed against major currencies in late New York trading on Thursday as the euro zone unemployment rate rose to euro-era high in January.

Crude prices rose on Thursday as U.S. jobless data came in positive, brightening crude demand perspectives.

Light, sweet crude for April delivery rose 1.77 dollars, or 1. 65 percent to settle at 108.84 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for April delivery also gained sharply by 3.54 dollars, or 2.89 percent, to finish at 126.20 dollars a barrel.