U.S. stocks climbed on Thursday, propelling the S&P 500 to a record close, after Federal Reserve Chair Janet Yellen said the central bank would probably continue tapering its asset purchases while tracking data to figure how much recent softness in the economy is due to the weather.
"Reduced tapering would be very negative to the market. We made a change in December to good news is good news," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.
For technical traders, "when you break through resistance which has taken a long time to get through, resistance becomes support," said Frederick of the S&P closing above 1,848.38, its prior closing high, set on Jan.15.
Appearing before the Senate in testimony delayed by a snowstorm, Yellen said the harsh weather could have played a role in the recent spate of tepid economic data.
"The market is of the opinion the weather has impacted business the last couple of months. When the weather is a little bad, and one or two retailers use it as an excuse, it tells you there's a problem with the one or two companies, but when 98 out of 100 tell you it's the weather, then you can believe it," said Doug Foreman, chief investment officer at Kayne Anderson Rudnick.
J.C. Penney jumped 26 percent after it projected a rise in yearly revenue and bigger margins.Sears Holdings gained 6.5 percent after the retailer posted a lower fourth-quarter loss.
Major U.S. Indexes
After a 38-point fall, the Dow Jones Industrial Average rose as much as 77 points, and ended up 74.24 points, or 0.5 percent, to 16,272.65.
The added 9.13 points, or 0.5 percent, to 1,854.29, with telecommunications and technology faring best and ultilities and energy the weakest performers among its 10 major sectors.
"The market's not cheap, but it's not expensive either. If you take the standard run rate of earnings and project it out, the S&P is trading at 16 times earnings, and a 16 multiple is pretty undemanding in reality. The important thing is stock selection, and getting the right companies in your portfolio," said Foreman.
Companies to avoid, Foreman believes, are those in the commodities business, such as Alcoa and Joy Global. Despite the appeal of low valuations, companies in the sector "all benefited from the big commodity boom that China engineered, and now that's behind us," he said.
"The Chinese are not going to build more empty office buildings and trains that go nowhere; that era is over," Foreman added.
The Nasdaq advanced 26.87 points, or 0.6 percent, to 4,318.93.
For every share that fell, two gained on the New York Stock Exchange, where nearly 697 million shares traded. Composite volume surpassed 3.5 billion.
The dollar reversed lower against the currencies of major U.S. trading partners and the yield on the 10-year Treasury note fell 3 basis points to 2.643 percent.
Gold futures for April delivery gained $3.80, or 0.3 percent, to $1,331.80 an ounce; crude-oil futures for April delivery fell 19 cents, or 0.2 percent, to $102.40 a barrel.
Appetite for equities and other riskier assets started Thursday's session on shaky ground on military and political unease in Ukraine and Russia, with the euro falling to a two-week low and Russia's rouble declining to a five-year low against the dollar.
"Western markets haven't reacted one bit over the past few weeks to what has gone on in the Ukraine. Not that they should have because of the tiny size of the Ukrainian economy but the instability of the situation at least today is mattering because of the uncertainty of how (Russian President Vladimir) Putin responds," emailed Peter Boockvar, chief market analyst at the Lindsey Group.
On Wednesday, the S&P 500 ended little changed, less than four points from its record finish.
—By CNBC's Kate Gibson
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