The Dow and S&P edged higher in late trading on Thursday as concerns about higher inflation prompted investors to buy staples and health shares, but a Senate investigation of Goldman Sachs hurt financials.

An unexpected rise in jobless claims added to the bearish sentiment that kept gains in check.

The Dow industrials' top percentage gainers were Coca-Cola Co , up 1.5 percent, Kraft Foods Inc , up 1.7 percent and Merck & co , up 1.5 percent.

The S&P 500 fell almost 1 percent earlier but bounced off near 1,300, a level that provided support in early March as buyers found it attractive.

Late Wednesday, a report from a Senate subcommittee said Goldman Sachs had sold mortgage-linked derivatives to clients at inflated prices and misrepresented the nature of the deals.

Goldman shares fell 2.9 percent to $155.59 and were the biggest drag on the S&P financial sector <.GSPF>, which was down 0.8 percent and the worst-performing of the benchmark's ten main sectors.

Goldman down $4 is a big hit, but they're not the only ones taking it on the chin, said Greg Harmon, president and founder of Dragonfly Capital Management in Shaker Heights, Ohio.

He said the report on Goldman was probably dragging the financial sector lower and cited discussion among traders that the quality of earnings for JPMorgan Chase , which reported Wednesday, put a damper on hopes for good numbers from Bank of America when it reports Friday.

The Dow Jones industrial average <.DJI> rose 21.95 points, or 0.18 percent, to 12,292.94. The Standard & Poor's 500 <.SPX> inched up 1.53 points, or 0.12 percent, to 1,315.94. The Nasdaq Composite <.IXIC> dipped 0.86 of a point, or 0.03 percent, to 2,760.66.

Google is scheduled to report results after the market's close. Analysts forecast the Internet company will report revenue growth of 25 percent.

The stock rose 0.1 percent to $577, but options activity suggested investors were bracing for a drop in the share price after Google's earnings report.

There has been notably more put buying over the past two weeks leading up to earnings for Google, said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research in Cincinnati, Ohio.

Supervalu Inc forecast fiscal-year earnings above Wall Street's expectations after its quarterly profit fell less than feared. The supermarket operator's shares shot up 17.4 percent to $10.66.

Shares of Arcos Dorados Holdings Inc , a large South American franchisee of fast-food chain McDonald's Corp , jumped 24.7 percent to $21.20 in their stock market debut as investors clamored for exposure to the famous brand in a region with booming consumer spending.

McDonald's, a Dow component, rose 0.2 percent to $77.03.

Ford Motor Co fell 1.8 percent to $14.71 after the company agreed to expand a recall of the best-selling F-150 pickup trucks. U.S. safety regulators said the recall was due to a possible short circuit that could cause airbags to deploy unexpectedly.

On the economic front, a government report showed a surprising jump in U.S. jobless claims, raising some questions among investors about the health of the labor market recovery. Economists said the number could be a one-time occurrence.

The core U.S. Producer Price Index rose faster than expected in March as fuel prices rose strongly, adding to concerns about inflation.

(Reporting by Rodrigo Campos; Additional reporting by Angela Moon; Editing by Jan Paschal)

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