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Near 2,000, S&P knocks out 28th record close of 2014

Traders work on the floor of the New York Stock Exchange in New York.
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Traders work on the floor of the New York Stock Exchange in New York.

U.S. stocks climbed on Thursday, with the S&P 500 toppling another record, as investors embraced upbeat economic reports and looked to a dovish message from Federal Reserve Chair Janet Yellen when she talks about the labor market in Jackson Hole on Friday.

"Nothing is really trend changing; we're seeing positive economic data, as we have seen," Dave Roda, regional chief investment officer for Wells Fargo Private Bank, said of Thursday's economic reports, which cast better-than-expected lights on housing, jobs and factory activity.

Hormel Foods rallied after the maker of pork and turkey products reported third-quarter results that beat expectations. Bank of America gained after agreeing to pay $16.65 billion to halt federal and state probes into mortgage-bond sales. Shares of Dollar Tree declined as Family Dollar Stores reaffirmed its support for its buyout offer, rejecting a bid from Dollar General.

On Wednesday, U.S. stocks mostly advanced after minutes from the Fed's last meeting showed some Fed officials want a "relatively prompt" rate hike based on the economy's progress.

Read MoreS&P 500 ends near record high after Fed-rate talk

"Yesterday was a little surprising, especially in reaction to the release of the Fed minutes, which had a little bit of a hawkish overtone to them," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Still, expectations of a "more dovish posture coming from Yellen" and a majority of the Federal Open Market Committee is holding sway with investors, said Luschini.

"In the end, Janet Yellen is the chair, and from the way she's voted in the past, and from the message that she's articulated, she wants broad-based strength in labor markets before moving to a higher-rate environment. We don't see the debate (within the FOMC) as changing the likely outcome," said Roda at Wells Fargo Private Bank.

Read MoreFed surprises with hawkish tone, but will Yellen?

"Everybody is focused on the nuance of Janet Yellen's speech tomorrow, which is on labor -- the one ingredient, maybe besides housing, that is keeping the Fed from raising rates sooner," said Roda, who added that a speech by European Central Bank President Mario Draghi could potentially be the more market-moving of the speeches at Jackson Hole.

"If you look at the economic data in Europe, they are rolling over. Given the data, and lack of inflation, the probability has increased" that of the euro zone doing a version of quantitative easing, said Rhoda.

While unlikely that Draghi would announce policy moves in Jackson Hole, "he may allude to perhaps the need for it, or give a light more insight. That could be market moving," Roda said.

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S&P 500
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NASDAQ
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Returning to its perch above 17,000 for the first time since July 29, the Dow Jones Industrial Average gained as much as 95 points, and ended at 17,039.49, up 60.36 points, or 0.4 percent.

Intel paced blue-chip gains that included 25 of 30 components.

A day after closing within 0.3 percent from its intraday all-time high of 1,991.39 set July 24, the S&P 500 advanced to 1,994.76, and finished at 1,992.37, up 5.86 points, or 0.3 percent, for its 28th record finish this year, with financials leading broad-based gains that included seven of 10 major industry groups.

After wavering on either side of neutral, the Nasdaq added 5.62 points, or 0.1 percent, to 4,532.10.

The CBOE Volatility Index, one gauge of investor uncertainty, declined 0.2 percent to 11.76.

For every two shares on the decline, three gained on the New York Stock Exchange, where nearly 566 million shares traded. Composite volume cleared 2.6 billion.

The dollar held steady against the currencies of major U.S. trading partners and the yield on the 10-year Treasury note fell 2 basis points to 2.409 percent.

On the New York Mercantile Exchange, gold futures for December delivery dropped $19.80 to $1,275.40 an ounce, a two-month low. The crude-oil contract for October rose 51 cents to $93.96 a barrel.

Data from the Labor Department on Thursday had jobless claims declining by 14,000 last week to 298,000, less than expected.

Read MoreClaims slide back below 300k as thaw continues

Separate reports had Americans reselling their homes in July at the most rapid pace in nearly a year, and the Conference Board's Leading Economic Index rising 0.9 percent last month.

A measure of manufacturing activity in August from financial-data firm Markit came in above expectations, and the Philadelphia Fed's business activity index jumped to 28.0 in August from 23.9 the month before.

—By CNBC's Kate Gibson

Coming Up This Week:

Friday

Earnings: Ann, Foot Locker, Royal Bank of Canada

10:00 am Fed Chair Janet Yellen at Jackson Hole

2:30 pm European Central Bank President Mario Draghi

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