NEW YORK - Despite economic readings that painted a mixed picture, Wall Street extended its rally Thursday, with modest gains in the major indexes on the heels of two days of sharp advances.

Though the indexes rose, declining issues narrowly outpaced advancers on the New York Stock Exchange.

On Tuesday and Wednesday, the market posted its biggest two-day rally in five years. Hopes have been growing that financial companies may be starting to recover from the credit crisis and that the Federal Reserve may lower interest rates to calm the markets.

Wall Street's anticipation of a rate cut comes after comments from a Fed official Wednesday and comes ahead of a speech Thursday by Fed Chairman Ben Bernanke.

Aside from a reading on third-quarter growth, economic news didn't offer investors much reason to cheer.

"The data's weak, and says to us that the Fed needs to stay engaged here," said Phil Orlando, chief equity market strategist at Federated Investors.

The Dow Jones industrial average rose 22.28, or 0.17 percent, to 13,311.73.

Broader stock indicators also rose. The Standard & Poor's 500 index edged up 0.70, or 0.05 percent, to 1,469.72; the Nasdaq composite index rose 5.22, or 0.20 percent, to 2,668.13.