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S&P 500 sets record high, closes shy of 1600

Stocks finished near session highs Thursday, propelling the S&P 500 to a fresh intraday high, as Wall Street cheered a better-than-expected jobless claims report and after the European Central Bank cut its key interest rate.

Major averages are poised to close higher for the second week in a row.

(Read More: After-Hours Buzz: AIG, LNKD, GILD & More)

The Dow Jones Industrial Average rallied 130.63 points, or 0.89 percent, to finish at 14,831.58, led by Caterpillar and American Express.

The S&P 500 climbed 14.89 points, or 0.94 percent, to end at 1,597.59, earlier hitting a fresh intraday high of 1,598.60. The Nasdaq jumped 41.49 points, or 1.26 percent, to close at 3,340.62. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, slid below 14.

Most key S&P sectors finished in positive territory led by techs and energy, while utilities held modest losses.

(Read More: Should Investors Fear the Fearless Market?)

"I'd say this is a week where we've shifted from micro to macro issues and today's focus is ECB and jobless claims," said Art Hogan, managing director at Lazard Capital Markets.

Still, Hogan cautioned that the old Wall Street adage, "sell in May and go away" could still take place.

"As corny as that expression is, it's happened for the last three years," he said. "Something's going to derail this rally and a large cohort of people are looking for that pullback…at the very least, we'll continue to have mini-setbacks…we haven't seen much more than 2-percent pullbacks so far this year."

Weekly jobless claims dropped to its lowest rate since January 2008 last week, according to the Labor Department. The four-week average declined 16,000 to 342,250. Also on the jobs front, planned layoffs declined to the lowest level since last December and down nearly 23 percent from March, according to consultants Challenger, Gray & Christmas.

(Read More: Markets Don't Want a Strong Economy: Bob Doll)

Investors will be looking ahead to the government's widely-watched monthly employment report, which is expected to show 140,000 new non-farm jobs were added in April, according to an estimate from Reuters, up from the 88,000 added in March.

As expected, the ECB knocked down its key rate by a quarter-point to 0.50 percent,the first rate cut since July 2012, as global central banks raced to enact easier monetary policy. ECB chief Mario Draghi added that the monetary stance will remain accomodative for "as long as is needed."

Draghi told reporters at a press conference following the rate cut announcement that inflation could remain subject to some volatility throughout the year. "Overall, euro area economic activity should stabilize and recover gradually in the second half of the year."

On Wednesday, the Federal Reserve said it was prepared to "increase or reduce"the monthly pace of its $85 billion in bond purchases.

(Read More: Roubini: Fed Risking Sequel to 2008 Financial Crisis)

ING U.S. edged higher in its market debut on the NYSE after the insurance and retirement-savings plan provider priced its IPO at $19.50 a share, below the initial expected range. The company started trading under the ticker symbol "VOYA," and said it plans to rebrand the company as Voya Financial over the next few years.

Among earnings, General Motors rallied after the automaker posted stronger-than-expected earnings.

Facebook rose after the social-networking giant posted revenue that exceeded expectations, as the company's mobile ad revenues continued to gain.

Yelp surged nearly 25 percent after the consumer-review website reported revenue that beat analysts' estimates and forecast second-quarter revenue above expectations.

SunPower spiked higher an hour ahead of the close after the solar company posted quarterly results that blew past expectations. The company was initially scheduled to post earnings after the closing bell.

Kellogg slipped after the cereal maker reported lower earnings, hurt by higher cost of commodities, but said it was on pace to meet its full-year goals.

AIG, Gilead Sciences and LinkedIn are among notable companies scheduled to post quarterly results after the closing bell.

To date, just over 75 percent of S&P 500 companies have posted quarterly results, with 69 percent topping earnings expectations and 21 percent missing, according to the latest data from Thomson Reuters. If all remaining companies report earnings in line with estimates, earnings will be up 4.8 percent from the same time a year ago.

However, only 46 percent of companies have beaten their revenue forecasts. On average, sales have come in 1 percent below estimates.

Intel announced that its board elected its current COO Brian Krzanich as the next chief executive. Krzanich will assume the role of CEO as of the chipmaker's May 16 shareholder meeting.

Meanwhile in Asia, shares fell across the board on Thursday after Purchasing Managers' Index (PMI) data showed Chinese factory growth easing, indicating that sluggish demand from the U.S. and Europe is weighing on Chinese exports.

Experts say that these factors, combined with Europe's high unemployment and easing inflation, could trigger a round of monetary stimulus from central banks around the world.

Also on the economic front, the U.S. trade deficit declined more than expected in March as imports posted their biggest decline since 2009, according to the Commerce Department. Separately, U.S. non-farm productivity rose modestly in the first quarter, according to the Labor Department, while revised figures showed that productivity fell in the fourth quarter.

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)