Dow, Nasdaq Finish at Multi-Year Highs

Stocks ended near session highs Thursday, with the Dow and Nasdaq logging multi-year highs, fueled by robust economic news and as the euro rebounded against the dollar following reports the euro zone central banks agreed to exchange their existing Greek bonds for new ones.

Thanks to today's rally, all major averages are now on pace to post weekly gains.

S&P 500

The Dow Jones Industrial Average rallied 123.03 points, or 0.96 percent, to close at 12,904.08, finishing at its best level since May 2008. Microsoft and BofA led the Dow gainers.

The S&P 500 jumped 14.81 points, or 1.10 percent, to close at 1,358.04. And the Nasdaq soared 44.02 points, or 1.51 percent, to end at 2,959.85, logging its best close level since December 2000.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to close near 19.

All 10 S&P sectors ended firmly higher, led by materials and financials.

“Things look like all green lights in the U.S. so stay in the U.S. and invest in U.S. based companies,” recommended Peter Andersen, CIO of Congress Wealth Management. "We’re right at the beginning of a fairly strong rally and that psychological level of [Dow] 13,000 will really bring more sideline players into the market.”

The euro ralliedagainst the U.S. greenback after a report that the European central banks will exchange their existing Greek bond holdings for new ones in an effort to help the situation in the debt-ridden nation. The swap would take place over the weekend, according to sources. However, the ECB and Bundesbank would not comment on the report.

“People are getting tired from the repeating headlines in Europe,” said Scott Brown, economist at Raymond James. “[Still,] the situation in Greece isn’t going to go away overnight.”

On the economic front, weekly jobless claims posted a surprising drop of 13,000 to a seasonally adjusted 348,000, according to the Labor Department, falling to its lowest level in almost four years.

Housing starts gained more than expected, climbing to 1.5 percent to an annual rate of 699,000 units in January, according to the Commerce Department.

Meanwhile, the Philadelphia Federal Reserve said its business activity index climbed to 10.2 in February, topping expectations from a Reuters poll for 9.5.

And the producer price index posted its largest gain in six months, rising 0.4 percent in January, after increasing 0.3 percent in December.

Earlier, Moody's warned that it may cut the ratings of 17 global and 114 European financial institutions because of more fragile funding conditions and increased regulatory burdens.

Among banks in the U.S., Moody's said it was reviewing the long-term ratings and standalone credit assessments of Bank of America, Citigroup , Goldman Sachs , JPMorgan Chase and Morgan Stanley .

Among earnings, General Motors posted its highest profit ever last year , though the automaker reported its quarterly results fell short of expectations.

J. M. Smucker tumbled to lead the S&P 500 laggards after the jam maker posted results that disappointed and cut its earnings forecast for the year.

NetApp soared after the data storage equipment maker reported earnings and revenue that met expectations. In addition, at least five brokerages boosted their price targets on the firm.

Baidu , Applied Materials and Nordstrom are among companies scheduled to post earnings after-the-bell tonight.

Apple rebounded, edging above the $500/share level. Meanwhile, the tech giant released a new version of its Macintosh operating system that incorporates various features from the software that powers the iPad maker's mobile devices.

Google eked out a gain after the Chinese commerce ministry said it was reviewing the search-engine giant's $12.5 billion deal to buy Motorola Mobility, as part of routine anti-monopoly checks. slumped after Morgan Stanley cut its rating on the online retailer to "equal weight" from "overweight."

Groupon climbed after the online daily deal site said it is testing a new program called Groupon VIP for $30 a month, which will include features such as access to past deals and early access to upcoming deals.

Meanwhile, foreclosure rates gained again with one in every 624 U.S. households receiving a foreclosure filing in January, up 3 percent from the previous month, according to RealtyTrac.

—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC

Coming Up This Week:

FRIDAY: CPI, leading indicators; Earnings from Campbell Soup, Heinz

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