U.S. stocks closed one percent higher on Thursday as investors cheered further weakness in the dollar and calmer bond markets, amid mixed economic data. (Tweet This)
The S&P 500 set a new closing record with information technology jumping 1.7 percent to lead all 10 sectors higher.
The Dow Jones industrial average came within 50 points of its record high after gaining more than 150 points in morning trades, with Apple and Microsoft leading the advancers. JPMorgan Chase hit a 15-year high.
The Nasdaq rose more than 1 percent to within 50 points of its record close, boosted by tech and biotechnology stocks.
"The closer we get to new highs the more buyers you'll attract," said Bruce Bittles, chief investment strategist at RW Baird. "The catalyst is the performance of the market itself."
"If it closes with a burst I think you carry it forward tomorrow," he said.
Analysts attributed gains to several factors, including further decline in the U.S. dollar and lower bond yields. Traders also noted some short covering ahead of options expiration on Friday.
"We have dollar weakness today. That continues to hold the key," said Peter Cardillo, chief market economist at Rockwell Global Capital. "There is complacency in the bond market and that's helping to ease that fear of yields climbing."
The U.S. dollar recovered slightly but held near recent lows, while the euro topped $1.14 for the first time since February. The U.S. 10-year Treasury yield fell to 2.24 percent, off Tuesday's high of 2.366 percent.
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"The equity market is behaving appropriately because the uptik in Treasury bond yields has not been accompanied by (a better economic outlook)," said John Lonski, chief capital markets economist at Moody's. "During all this turmoil in the bond market we didn't have (the outlook for the) Fed funds move higher."
He said expectations in the Fed funds futures are for a December rate hike at the earliest, while GDP growth estimates continue to be lowered. The accelerated gains in the 10-year yield was more the result of being the yield falling too low in April, Lonski said, expecting it to remain in a range.
Tech stocks led the rally. Apple closed up 2.3 percent. Facebook broke its 50-day moving average with a 3.5 percent leap.
Microsoft extended recent gains, closing up 2.3 percent. On Wednesday, Deutsche Bank upgraded the stock to "buy" from "hold," noting "investor enthusiasm about Azure and Office 365 is just starting to kick in."
Cisco fell 1 percent despite posting earnings after the close Wednesday that beat on both the top and bottom lines. In a conference call, outgoing CEO John Chambers said product orders in Russia, Brazil and China declined year-over-year, with China orders falling 21 percent. Orders for the Americas gained 2 percent from the same period last year.
"Their outlook for capex and demand was pretty positive," said Art Hogan, chief market strategist at Wunderlich Securities. "I think Cisco is part of it. When you have stocks pressed down because of the stronger dollar or higher yields, you have a beta trade."
Beta stocks have more volatility with market movements, falling more with stock index declines and gaining more with index advances.
Read MoreBonds coming off rally, not selling off: Strategist
Investors also attributed Thursday's gains to a relief rally on the postponement of a liftoff.
The data is "not as good as we would like to see. Not only is there little sign of recession, bonds seem to have finished their gains on top of these yields," said Bruce McCain, chief investment strategist at Key Private Bank. "People are shifting into equities."
Weekly jobless claims came in at 264,000, a touch below last week's reading and below expectations for a slight increase. The initial filings for unemployment benefits per week remain near 15-year lows.
"Jobless claims are positive on the employment growth picture," said Jim Dunigan, chief investment officer at PNC Asset Management. But "data continues to be lumpy."
The producer price index for April fell 0.4 percent, with the core figure down 0.2 percent, missing expectations for a slight gain. The monthly measure of input costs is a secondary factor in determining the rate of change in prices, after the consumer price index.
"All that points to less concern the Fed will increase rates in June," Dunigan said of the economic reports.
The Federal Reserve will eye both the employment situation and inflation for signs the economy is ready for an interest rate hike. Consensus is for a rate hike in September or later in the year, but central bank policymakers have not ruled out a June liftoff.
Futures looked past the mixed morning data, with the Dow futures continuing to hold gains of more than 100 points.
"Intraday oversold conditions returned during yesterday's consolidation phase, setting a positive tone for today," BTIG's chief technical strategist Katie Stockton said in a Thursday morning note. "A breakout has been elusive for the SPX as investors have focused beyond the equity market, but we are encouraged by improved momentum and relatively sanguine market internals."
Stocks closed little changed on Wednesday as soft retail sales and renewed gains in yields kept traders on edge.
Major U.S. Indexes
The Dow Jones Industrial Average closed up 191.75 points, or 1.06 percent, at 18,252.24, with Apple leading gains and Cisco the only decliner.
The closed up 22.61 points, or 1.08 percent, at 2,121.10, with information technology leading 10 sectors higher.
The Nasdaq closed up 69.10 points, or 1.39 percent, at 5,050.80.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.
Three stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 713 million and a composite volume of 3.1 billion in the close.
Crude oil futures settled down 62 cents at $59.88 a barrel on the New York Mercantile Exchange.
Gold futures settled up $7.00 at $1,225.20 ounce, the highest close since Feb. 13.
In corporate news, Paypal will trade under the ticker "PYPL" on Nasdaq after its split from eBay, Dow Jones reported.
Avon closed up 6 percent, spiking on report of an acquisition offer from a firm whose existence could not be verified.
Cosi dropped 10.50 percent after posting a loss of 12 cents a share, narrowing the 17 cent loss from the same period last year. Revenue came in at $17.9 million, below $18.4 million in the year-ago period. Comparable store sales rose 4.4 percent in company-owned stores, while franchises saw a decrease of 2.7 percent.
Kohl's fell more than 13 percent, for its worst day in more than 2 years. The retailer reported earnings per share of 63 cents, a 5 percent increase from the year-ago period, on revenue of $4.12 billion, a 1.3 percent gain from last year. First-quarter same-store sales rose 1.4 percent, contrasting with a 3.4 percent decline in the first quarter of 2014.
J.C. Penney closed down nearly 7.7 percent on earnings reported after the close Wednesday. The retailer reported a smaller-than-expected loss in earnings per share, on revenue just shy of estimates.
Shake Shack reversed early gains to end down 4 percent. The burger chain reported earnings of 4 cents a share, beating expectations of a 3 cent decline. Revenue also topped estimates. Full-year revenue guidance was in-line with consensus.
Jack in the Box fell 4 percent despite posting earnings and revenue that topped estimates.
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CarMax gained nearly 1 percent after Sterne Agee initiated the used-car retailer at "buy," citing the firm's dominance in the sector and long-term opportunities to triple its share in existing markets and double its footprint amid increased supply of recent-model used vehicles.
European equities ended higher, boosted by gains in steel producers the European Union's decision to impose a duty on imports of electrical steel.
Greece on Thursday offered a concession to its international lenders by pushing ahead with the sale of its biggest port, Piraeus, Reuters said.
On tap this week:
Thursday
Earnings: Nordstrom, Party City, Applied Materials,Symantec, El Pollo Loco, King Digital
Friday
Earnings: Nippon Telegraph, Petrobras
8:30 am: Empire State survey
9:15 am: Industrial production
10:00 am: Consumer sentiment
4:00 pm: TIC data
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