Stocks traded just off the highs of the day as the market close neared amid light volume after a slew of economic news, including rising inflation and strong regional manufacturing data.
The Dow Jones Industrial Average rose more than 30 points a day after gaining modestly to once again hit multi-year highs.
Among Dow components, Coca-Cola and DuPont rose, while American Express and Hewlett-Packard fell.
The S&P 500, which ended Wednesday at more than double the lowest level of the bear market, rose slightly as did the Nasdaq. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.
Among key S&P sectors, energy, materials and consumerstaples rose.
The firmer tone to the market, a day after the major indices all reached multi-year highs, largely reflected strength in the economic data, said Tom Schrader, managing director for U.S. equity trading at Stifel Nicolaus Capital Markets.
"I think most of the news we saw this morning was generally bullish," Schrader said, adding, "A little bit of inflation is a good thing."
Consumer prices rose slightly more than expected in January. The overall consumer price index gained 0.4 in January, while the core CPI, which excludes volatile food and energy prices, rose 0.2 percent, the Labor Department reported. (Read more: Whiffs of Inflation, but Strength in Some of Thursday's Numbers.)
The market should continue to do well, said Keith Springer, president of Springer Financial Advisors in Sacramento, as long as the Federal Reserve keeps buying bonds to stimulate the economy. Springer said the economic data released Thursday confirms "this economy can’t stand on its own without the stimulus."
Another positive for the market: "You still have a non-believing public," Springer said. Many individual investors remain sidelined, or have their money in bond funds, and haven't participated in the market's surge over the last few months. "The trading public has been out of this market for a long time," he said.
In geopolitical news, Iran continued to say it planned to move warships through the Suez canal in an action Israel called a "provocation," although news reports differed on Iran's true intentions.
Oil prices were mixedamid the news reports out of Iran, and amid further unrest in the Middle East, including news that police unleashed an attack in a square filled with peacefulprotesters in Bahrain.(Read more: The Quiet Before the Storm?)
Brent crude fell below $103 a barrel, while U.S. light sweet crude rose above $86 a barrel, narrowing the spread between the two oil benchmarks.
The higher oil prices buoyed energy stocks, with more than 70 percent of the sector higher for the day. Conoco Philips , MarathonOil and Sunoco were among the biggest gainers.
Williams Companies led the sector, however, jumping after news the energy company plans to split into two entities, with one company focused on exploration and production and the other focused on infrastructure, such as pipelines.
And shares of Apache dropped after the independent oil and gas company released results that fell short of expectations. Apache has operations in Egypt, but the company said they have not been affected by the political unrest.
In earnings news, Duke Energy gained in pre-market trading despite reporting earnings results of 21 cents-a-share, which fell shy of analyst expectations for 23 cents, according to Thomson Reuters I/B/E/S.
Coca-Cola gained after the drinks maker said it would boost its quarterly dividend to 47 cents a share from 44 cents a share. Rival Dr. Pepper/Snapple also advanced after reporting fourth-quarter earnings that beat Wall Street expectations, and delivered a positive outlook.
Also, Cliff's Natural Resources skyrocketed after reporting its fourth-quarter profit more than tripled on higher sales, a result that far exceeded analyst expectations.
Weight Watchers skyrocketed more than 30 percent after its result beat expectations. The provider of weight management services said its fourth-quarter profits that more than doubled on higher sales from its Internet business.
Among tech companies, NetApp sank after reporting a hit to sales from shortages of components, an issue the data storage and management company expects will continue to plague the company. NetApp's fiscal third-quarter earnings, however, skyrocketed 60 percent.
Nvidia , however, soared after the chip maker beat expectations for the fiscal first-quarter on strong sales of microchip processors for smartphones and tablets. Semiconductor sectors rose overall. The iShares Semiconductor exchange-traded fund gained more than 1 percent.