* FedEx, J.C. Penney gain on hedge fund stakes
* NY factory index falls in Nov to weakest since May -NY Fed
* Twitter options begin trading
* Indexes up: Dow 0.3 pct; S&P 0.3 pct; Nasdaq 0.2 pct
NEW YORK, Nov 15 (Reuters) - The Dow and the S&P 500 climbed to fresh highs on Friday in the wake of reassuring remarks by Federal Reserve chair nominee Janet Yellen that the central bank's accommodative policies would continue.
Still, the advance was limited, with both indexes on track for a sixth consecutive week of gains and the S&P 500 just five points away from 1,800, its next level of potential resistance. The Nasdaq 100 index was near a 13-year high.
"The market is starting to price in improved economic growth, improved earnings and slowly getting over worries about the what the Fed might do," said Tim Ghriskey, who helps manage more than $1.5 billion as chief investment officer of Solaris Asset Management LLC.
Shares of Exxon Mobil Corp led the blue chip Dow index higher. The stock rose 1.2 percent to $94.35 a day after Warren Buffett's Berkshire Hathaway Inc disclosed a new $3.45 billion stake in the world's largest publicly traded oil company.
J.C. Penney Co shares rose 6.2 percent to $9.23 after a number of hedge funds, including Highfields Capital, Jana Partners and Farallon Capital Management Group took positions in the ailing department store operator, and Glenview Capital, already a big owner, added to its holdings.
FedEx Corp shares added 2 percent to $139.12 after regulatory filings showed funds including Daniel Loeb's Third Point LLC, George Soros' Soros Fund Management LLC and John Paulson's hedge fund, Paulson & Co all took stakes in the company.
A divergence continued between large-cap and mid- and small-cap stocks, which are seen as riskier because they exhibit greater sensitivity to macroeconomic factors. The Russell 2000 index of small- and mid-cap stocks was flat at 1,111.37.
"Going forward, I'm keeping an eye on the 1,120 area on the Russell 2000, as small-cap leadership would be a good sign for risk appetite," said Bryan Sapp, senior trading analyst at Schaefer's Investment Research in Cincinnati.
The Dow Jones industrial average was up 50.66 points, or 0.32 percent, at 15,926.88. The Standard & Poor's 500 Index was up 3.56 points, or 0.20 percent, at 1,794.18. The Nasdaq Composite Index was up 6.64 points, or 0.17 percent, at 3,979.38.
Following Twitter 's trading debut on the New York Stock Exchange on Nov. 7, options market makers began pricing and trading contracts Friday to buy or sell Twitter shares at various prices in the future.
Data showed New York state's manufacturing sector unexpectedly shrank this month while U.S. industrial production fell in October as output at power plants and mines declined. The market barely reacted to the reports.