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Stocks close near fresh four-year high

Updated at 4:05 p.m. ET: Stocks closed Friday near a fresh four-year high, chalking up a sixth straight week of gains, as a drop in Wall Street's “fear gauge” and gains across all sectors suggested the market has room to move higher.

The Nasdaq rose as Apple’s shares reached an all-time high.

The S&P 500 made a solid move above the closely watched 1,400 level in the last session, posting its biggest gain in two weeks. The S&P 500 needed to close above 1,419.04, its April high, to make a new four-year high. It closed Friday less than a point below that level.

“From a sentiment point of view, the market has little to inhibit it from proceeding higher,” said Ralph Edwards, director of derivatives strategy at ITG in New York.

“The best rallies are, of course, the broadest, so it makes sense to view, in real-time, the stocks that are propelling the index so as to make sure that the advance is not just being carried on the shoulders of one sector,” he said. “Here, the news is also good.”

Tom Lee, chief equity strategist at JPMorgan, said he expects stocks to rally into the election in early May.

Lee pointed to improving second-half fundamentals, particularly in housing and construction activity, which he said “has really been building some economic momentum, or sustaining it.”

Fund managers have become too bearish, he told CNBC.

“We think there’s going to be a big chase into Election Day,” Lee said, noting that he has raised his target for the S&P 500 index and now expects it to hit the 1,475 level by early November -- an increase of 4 percent from its current valuation.

The CBOE VIX volatility index, seen as a measure of investor concern on Wall Street, hit a 5-year low on Friday, fell 6 percent to 13.47 in a sign that investors are less concerned about risk than they have been.

With few news headlines and light participation during summer holidays, traders are increasingly taking their cues from market technicals.

Shares in Apple Inc jumped to an all-time intraday high of $645.48 earlier in the session. Broker Jefferies raised its price target on the stock to $900 from $800 and gave it a 'buy' rating.

But Facebook shares continued to slide after the expiration of a lockup period on some of the company's stock following its initial public offering. The shares fell as much as 4.3 percent to a record low of $19.01.

Groupon Inc also slumped to a new low on Friday after Evercore Partners analyst Ken Sena downgraded shares of the largest daily deal company and set a $3 price target on the stock.

The S&P 500 has risen 2.6 percent in August and nearly 11 percent since a year low in June as traders eye some encouraging U.S. jobs data and highly anticipated policy meetings at the European Central Bank and the Federal Reserve in September.

The economic data on Wednesday was mixed, leaving investors wondering if the recovery was real.

The Thomson Reuters/University of Michigan consumer sentiment survey for August rose to its highest since May to 73.6, buoyed by sales at retailers and low mortgage rates.

Separately, the Conference Board said its leading economic index climbed 0.4 percent, reversing a 0.4 percent decline in June and pointing to slow growth through the end of 2012.

"It's interesting because we've had this mixed bag from the economic data. Today's is a good step and yesterday was a little disappointing, with the housing data, so we are all just kind of wondering, is this recovery real?" said Ryan Detrick, senior technical strategist, Schaeffer's Investment Research in Cincinnati, Ohio.

Trading volume, which has been meager over the past several sessions during a seasonally slow period, could be even lighter heading into the weekend. This week has seen the lowest and second lowest full-day trading volumes of the year.

The S&P rallied for six days through August 10, boosted by the anticipation of more actions from central banks in the United States and euro zone.

The S&P 500 rose to a four-month peak on Thursday after comments from German Chancellor Angela Merkel reinforced investor expectations for action to tackle the euro zone debt crisis.

Gap advanced after the clothing retailer posted a higher quarterly profit and raised its full-year forecast.

Marvell Technology Group Ltd dropped after the chipmaker posted second-quarter earnings and said current-quarter results may miss expectations.

Reuters contributed to this report.