NEW YORK (CNNMoney.com) -- Stocks rallied Thursday morning, pushing the Dow Jones Industrial average to a new trading high and within striking distance of 12,000 after oil prices hit their lowest level of 2006.

The 30-share Dow (up 68.75 to 11,920.88, Charts) climbed about 0.5 percent an hour and a half into the session.

The world's most widely watched stock market gauge hit a new trading high just above 11,923, climbing within 77 points of the 12,000 milestone.

The S&P 500 (up 6.80 to 1,356.75, Charts) index rose 0.4 percent while the tech-fueled Nasdaq composite (up 18.68 to 2,326.95, Charts) climbed 0.6 percent.

Stocks fell Wednesday on weaker-than-expected earnings reports and news that a small plane had hit a New York high rise apartment building. (Full story.)

But all three major gauges turned higher Thursday after oil prices fell to their lowest level this year ahead of the government's weekly report on fuel inventories.

After the report, prices turned higher, with U.S. light crude up 33 cents to $57.92 a barrel on the New York Mercantile Exchange, still off about 25 percent below the record highs hit in July.

In corporate news, soft drink and snack company PepsiCo (down $1.19 to $62.67, Charts) reported higher earnings and raised its earnings guidance for the full year, but shares slumped 1.7 percent.

Shares of Costco (up $1.91 to $51.98, Charts) jumped about 4 percent after the wholesale retailer reported slightly improved results that beat lowered estimates.

Better-than-expected results from Harley-Davidson (up $0.42 to $63.57, Charts) also sent shares up around 4 percent.

And shares of Dow component McDonald's (up $0.77 to $42.02, Charts) rose about 2 percent after the fast-food chain said third-quarter earnings would be better than analysts expected.

Of the 30 blue chips in the Dow, 24 rose and six fell.

Market breadth was positive. On the New York Stock Exchange, losers beat winners by three to one on volume of 200 million shares. On the Nasdaq, decliners topped advancers by three to one on volume of 300 million shares.

On the economic front, the trade gap rose to a record level in August. U.S. imports outstripped exports by $69.9 billion in August, according to the Commerce Department, up from the previous record $68.0 billion level set in July.

Treasurys rose, lowering the yield on the 10-year note to 4.76 percent from 4.78 percent level they rose to late Wednesday following the release of the minutes of the latest Federal Reserve meeting. The minutes showed central bank policymakers still concerned about the risk of inflation.

The dollar was lower against the euro and the yen in early trading.

COMEX gold for December delivery fell $1.10 to $575.40 an ounce.

Stocks in Asia ended mixed while European stocks posted modest gains.

Bulls to keep running, for now

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