Stocks rose for a sixth straight day after UPS raised its outlook and a pair of manufacturing reports came in better than expected. Investors shrugged off a jump in jobless claims.
The Dow gained 21.46, or 0.2 percent, to close at 11,144.57. The S&P 500 gained just 1 point, or 0.1 percent, but pulled off its second straight finish above 1,200.
Intel, Chevron and Cisco were the leaders of the Dow pack.
Meanwhile, Walmart , Verizon and Coca-Cola were among the laggards.
Bank of America-Merrill Lynch delivered a bullish note on the market, raising its 12-month target for the S&P 500 to 1,350 from 1,275, citing higher earnings and lesser risk from downside scenarios in the financials and consumer discretionary sectors.
Bank stocks got a boost amid projections for a solid earnings season for the sector.
"Maybe we're past the peak in writedowns and may begin to see 'writeups' of asset values" due to an improvement in commercial and residential real estate and debt, said Jeff Kleintop, chief marketing strategist at LPL Financial.
"Debt that we thought was toxic a year ago may be less toxic today," Kleintop explained.
Citigroup hit $5 a share, a level it hasn't seen since late last year, but then backed off, ending at $4.81. It was the most actively-traded stock on the New York Stock Exchange.
Citigroup shares could rise to the$6 to $8 range in the coming months, Jeffery Harte of Sandler O'Neill told CNBC, adding that investors don't appreciate that the bank's toxic assets are "in the past."
The day's economic reports were mixed.
First-time requests for jobless benefits rose to 484,000 last week, the highest levels since late February. Economists had expected claims to fall to 440,000.
The Philadelphia Fed reported its manufacturing index rose to 20.2 in April from 18.9 in March — just a tad better than the 20 expected. But the Empire State manufacturing survey blew forecasts out of the water, jumping to 31.86 from 22.86, well above the 24 expected. And industrial production ticked up 0.1 percent in March; economists had expected a more robust increase of 0.8 percent. Capacity utilization rose to 73.2 percent from 73.
On the housing front, home-builder sentiment rose more than expectedto a seven-month high in April, according to the National Association of Homebuilders.
UPS shares shot up more than 5 percent after the package-delivery service said its first-quarter earnings would be much higher than expected and raised its full-year outlook. The firm also received price-target upgrades from at least 4 brokerages.
Rival FedEx also rose after the company said it will hire 270 new employees for a new distribution hub in North Carolina that is currently under construction.
After the bell, earnings reports are due out from Google and AMD.
In addition, Bank of America and General Electric , parent company of CNBC, are expected to report earnings on Friday before the bell.
Ford jumped after the auto maker said its European sales were up more than 16 percent on the year in March and market share hit a 12-year high.
Meanwhile, Toyota dropped after the National Highway Traffic Safety Administration said it plans to conduct its own tests on the Lexus GX 460 model. Though the Toyota won some praise for a fast response to pulling the vehicle out of showrooms after a Consumer Reports article warning of an unusually high rollover risk.
Restaurant operator Yum Brands continued to trade higher after the firm exceeded Wall Street forecasts with its earnings report on Wednesday after the bell.
Meanwhile, the Wall Street Journal reported that German and Russian officials are investigating whether Hewlett-Packard paid millions in bribes to win a contract in Russia.Brokerage Collins Stewart also raised the tech giant's price target to $65 from $60.
Microsoft shares rose after brokerage Caris raised the PC maker's price target to $28 from $27.
Several retailer stocks were also upgraded by analysts:
Coach shares popped after brokerage Jefferies raised the fine accesories retailer's price target to $48 from $40.
JPMorgan also raised its price target on at least six retailers including JCPenney , Macy's and Target .
The Dow is now 70 percent above the March 2009 lows, the S&P 500, 79 percent higher. The Nasdaq Composite has nearly doubled, registering a 97.4 percent gain since that date.
A debate has been raging in the market — Is it due for a pullback or is there more room to run?
"Both," Kleintop says.
"I think we're gonna get a pullback — maybe 5 to 10 percent — followed by a very powerful rally at the end of the quarter," he said.
You read that right: A pullback AND a rally, all before the end of the quarter.
Kleintop likes technology and industrials right now, and is backing away from bets on consumers — not because he's negative on the consumer, but — just because he thinks the trade is played out.
Oil prices hovered near $86 a barrel. The dollar roseagainst the euro, which fell broadly amid concerns in Greece while gold pricesheld steady below $1,160 an ounce.
Greek bond spreads got hammered once again and the country may cancel its dollar bond offering amid weak demand. Investors worried that the country may be ready to tap an emergency bailout package.
The U.S. economy still needs the "strong medicine" of low interest rates as it goes thrugh a post-crisis adjustment, said Atlanta Fed President Dennis Lockhart. Meanwhile, St. Louis Fed President James Bullard said the Fed's pledge to keep rates low should reflect more "conditionality" on the state of the economy. And, Dallas Fed President Richard Fisher said the Fed is finished with forcing money into the markets and said it will not fund federal fiscal gaps by printing currency.
Volume is finally starting to get over the daily average: More than 10 billion shares were traded on the three major exchanges. Decliners outpaced advanvers, roughly 8 to 7.
Still to Come:
THURSDAY: Taxes due; earnings from Google & AMD after the bell
FRIDAY: State unemployment rates; housing starts; Fed's Warsh speaks; consumer sentiment; earnings from Bank of America, GE, Mattel & Gannett
Send comments to cindy.perman@nbcuni.com.
