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Dow Logs 3-Day Rally, S&P Closes at 1400

Stocks closed near their best level in thin trading Thursday, with the S&P rallying to 1,400, as hopes for further stimulus from the Federal Reserve seemed to overshadow worries over the jobs market and some tepid earnings reports.

“It’s remarkable that we’ve come back to 1,400 on the S&P,” said Brian Battle, vice president of trading at Performance trust Capital Partners, adding that the index's 11 percent rally so far this year is outperforming the Dow's 8 percent gain. "But 2012 will be a year of moves up and down because of lack of info and volume.”

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The Dow Jones Industrial Average logged a three-day gain, jumping 113.90 points, or 0.87 percent, to end at 13,204.62, led by Wal-Mart and Chevron .

The S&P 500 rose 9.29 points, or 0.67 percent, to finish at 1,399.98, while the Nasdaq climbed 20.98 points, or 0.69 percent, to close at 3,050.61.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to end near 16.

Most S&P sectors logged a gain, led by telecoms and consumerdiscretionary, while materials continued to trade lower.

"It’s been a stop-go recovery—we’ve had very strong jobs data for a few months, probably too strong given the pace of the economy, now I think we’re going to get a bit of a lull," said Joshua Feinman, chief economist at Deutsche Bank Advisors on CNBC’s “Squawk on the Street.” "We are still making progress, but it’s coming in fits and starts."

New claims for unemployment benefits declined last week by 1,000 to a seasonally adjusted 388,000, according to the Labor Department, but the four-week moving average jumped 6,250 to 381,750, the highest since January. Meanwhile, pending home sales rose 4.1 percent in March, hitting its highest level in almost two years, according to the National Association of Realtors' monthly survey.

Stocks jumped in the previous session, thanks to Apple's blowout quarterly results. Apple ended slightly lower following Wednesday's strong rally that pushed the stock to $610 a share.

In addition, Wall Street cheered statements from Federal Reserve that the central bank remains prepared to take actionto help the economy.

"The hurdle is that things have to get worse in the economy," noted Feinman. "If the economy continues to do what it’s been doing, I don’t think the Fed’s going to do QE...So the people who are hoping for QE, be careful what you wish for because you’re only going to get it if the economy falters."

Exxon Mobil declined after the energy giant missed earnings estimates, as oil and natural gas production fell 5 percent from a year ago. Meanwhile, the Dow component announced a 21 percent dividend hike, becoming the top corporate dividend payer, surpassing AT&T .

UPS edged lower after the package delivery company reported quarterly results that grew compared to the same period last year, but still missed Wall Street estimates.

PepsiCo reported a smaller decline in earningsthan estimates, thanks to price increases, and the beverage giant reaffirmed its full-year outlook.

Of the 254 S&P 500 firms that have posted quarterly results so far, almost 72 percent have topped earnings estimates, while nearly 15 percent have missed.

Amazon.com , Starbucks and Zynga are among notable companies slated to report earnings after-the-bell tonight.

Wal-Mart rallied after UBS said the retail giant's recent stock plunge in the wake of the bribery allegations at its Mexican affiliateappears to be overdone. The firm added that the ongoing investigations will have no immediate impact on daily store operations in Mexico or the U.S., but that Walmex could see slower growth.

Johnson & Johnson edged higher after the drugmaker boosted its quarterly dividend to 61 cents from 57 cents.

Chesapeake Energy announced it would stop the controversial program that allowed the firm's CEO Aubrey McClendon an ownership stake in its wells. The move comes days after McClendon borrowed as much as $1.1 billion against his 2.5 percent interest in wells received under the program. Meanwhile, S&P cut its rating on Chesapeake and placed the stock on negative credit watch.

H&R Block plunged more than 10 percent after the tax preparer closed another round of stores and cut nearly 350 employees in an effort to realign its business. The firm also said the head of its U.S. retail tax services unit resigned.

European shares declined, easing back near their three-month lows following news that euro zone confidence weakened in April, with the business sentiment index plunging to a 14-month low.

Treasury price held their gainsafter the government auctioned $29 billion in 7-year notes at a high yield of 1.347 and a bid-to-Cover at 2.83.

—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC

Coming Up This Week:

FRIDAY: GDP, employment cost index, consumer sentiment; Earnings froM Chevron, Merck, P&G

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