The S&P 500 could take a swing at 1500 in the near future if earnings news doesn't trip it up.
Stocks lept ahead Thursday, fueled by much better housing and jobless claims data after several days of sideways trading.
Traders looked past a weak Philadelphia Fed number and instead focused on the surprising 12 percent jump in housing starts and the lowest weekly jobless claims number since January, 2008.
Disappointing earnings news from Citigroup and Bank of America was also ignored. But that may not be the case Friday when General Electric, Morgan Stanley, Schlumberger, State Street, SunTrust Banks, McMoran Exploration, Parker Hannifin, Johnson Controls and Rockwell Collins report.
"We're at a new (S&P) high for the recovery. If it gets near 1500, there's also going to be something else in the background. You're having people process it, and look at their portfolios and wonder if they have enough in stocks," said Jim Paulsen, chief investment strategist at Wells Capital Management.
The S&P 500 rose 8 to a new five-year high of 1480, and the Dow was up 84, at 13,596, just short of a five-year high. The Nasdaq rose 18 to 2126.
The consumer discretionary and industrial sectors led the market higher. Whether it continues to rise Friday could depend on overnight data from China and Friday's earnings reports.
"It will probably depend on what comments we get from some of these big players coming up," said Paulsen.
Paulsen said the tone of CEOs when they discuss their outlook could be what determines whether the market continues higher, driving the S&P to the psychological 1500 mark.
"I don't think it will take a lot now unless there's some big time disappointment that sets in," he said. "It might just go up to 1500 and test it and see how the market takes it."
General Electric could be important Friday, since its businesses span multiple industries and the world. GE is a minority owner of NBC Universal, the parent of CNBC.
"Is there any other stock that's represents global GDP like GE?" said Paulsen. GE is expected to earn $0.43 per share for the fourth quarter on revenues of $38.7 billion.
"It's attached to so many different verticals in the S&P 500," said Art Hogan of Lazard Capital Partners. "When you have a General Electric, that's a pretty good window into what the rest of the S&P is doing in terms of supply and demand."
Hogan agreed the market could keep moving higher for now.
"I think it's a replacement rally," he said, pointing to money returning into the momentum stocks that were sold at the end of the year. "I think we continue to have legs to this rally. Part of this is the rotation out of bonds into stocks, which is manifesting itself this year finally. We're working on the assumption that February will bring us some good resolve out of Washington."
Hogan's assumption is that Congress gets past the debt ceiling battle and budget wrangling without derailing the economy or markets. He said the fact investors are able to consider both economic news and earnings is a healthy trend.
What Else to Watch
There is consumer sentiment data at 9:55 a.m. ET.
Chinese GDP and other data is released overnight.
"The economy is more or less back on track," said Helen Zhu, Goldman Sachs chief China equity strategist on "Squawk on the Street."
"We do think this year there's likely to be more proactive fiscal policies to come, but most of those announcements are likely to come in March." For the year, she expects GDP growth of 7.7 percent and the fourth quarter number should be slightly under 8 percent, up from 7.4 percent in the third quarter.
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