Stocks extended their gains in the final hour of trading to close near session highs Thursday, with all key S&P sectors finishing in positive territory, but volume was light amid caution ahead of next week's flurry of earnings reports.
"The important thing is that we're starting to [see money move] into the financials, which is [an indication] of a real bull move to the upside," said Gordon Charlop, managing director at Rosenblatt Securities. "Because behind financials, you know housing is going to be behind that and that's been one of the things we've been waiting for."
The Dow Jones Industrial Average jumped 80.71 points, or 0.60 percent, to close at 13,471.22, led by Bank of America and Hewlett-Packard.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell near 13.
All key S&P sectors closed in positive territory, led by financials and energy.
"We're all waiting on earnings," said Joe Saluzzi,co-manager of trading at Themis Trading. "[The market] set a high watermark for 2012…volume's been low and it will stay low." (Read More: Bank Earnings--What to Watch for This Season)
Stocks initially opened in positive territory as Wall Street cheered a strong export data from China and upbeat comments from the European Central Bank on the euro zone.
The ECB held interest rates at a record low of 0.75 percent, refraining from a cut following fledgling signs of life in the euro zone economy and with inflation still above target.
ECB President Mario Draghi said while weakness in the euro zone area is expected to continue into 2013, economic activity should gradually recover later in the year.
"Several ... indicators have broadly stabilized, albeit at low levels and financial market confidence has improved significantly," said Draghi at a press conference.
China's export growth rebounded in December to $31.6 billion from $19.6 billion in November, expanding at the fastest rate in seven months. However, China's Commerce Ministry last month warned against hoping for an imminent recovery in trade, saying that world economic growth remained subdued. (Read More: China Improving Is a Big Story)
Herbalife turned negative after CEO Michael Johnson defended his company on CNBC after activist investor Bill Ackman called the firm an unsustainable "pyramid scheme." Meanwhile, hedge-fund manager Daniel Loeb's Third Point said Wednesday it had taken a stake of more than 8 percent in the company. (Read More: Herbalife President—Ackman's Claims a 'Gross Distortion')
Tiffany tumbled after the luxury goods retailer said its holiday season same-store sales were unchanged from the same period a year ago, below its own expectations, and added its fiscal-year earnings will be near the low-end of its prior estimates.
Ford Motor gained after the automaker declared it is doubling its quarterly dividend to 10 cents a share, just nine months after it announced its first dividend in nearly five years.
Apple CEO Tim Cook met with China Mobile's chairman in Shanghai, to discuss what the company calls "matters of cooperation." No details were given, but the meeting raised hopes that Apple may finally strike an iPhone carriage deal with China Mobile. Separately, Piper Jaffray lowered its price target on the tech giant to $875 from $900.
Microsoft slipped after Morgan Stanley downgraded the Dow component to "equal weight" from "overweight," citing disappointment regarding Windows 8 and a weak PC market.
Facebook rallied after closing above $30 a share in the previous session for the first time in six months. Late Tuesday, the social-networking giant sent out a press event invitation for next week, with traders and strategists buzzing about a possible phone or a search engine.
Nokia surged after the struggling Finnish handset maker said its fourth-quarter results were better than expected and that the mobile phone business achieved underlying profitability.
Chevron is scheduled to post its interim earnings after the closing bell.
Treasury prices pared their losses after the government auctioned $13 billion in 30-year notes at a high yield of 3.070 percent. The bid-to-cover was 2.77.
On the economic front, weekly jobless claims rose 4,000 to a seasonally adjusted 371,000, according to the Labor Department. Economists in a Reuters survey forecast a total of 365,000 new filings compared with 372,000 in the prior week.
And wholesale inventories rose 0.6 percent to a record $498.95 billion in November, according to the Commerce Department, topping expectations for a gain of 0.3 percent.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
FRIDAY: International trade, import and export prices, Fed's Plosser speaks, Treasury budget, Best Buy to report holiday sales; Earnings from Wells Fargo
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