The S&P 500 climbed for a fourth session, adding to this week's rally after the U.S. and China agreed to temporarily slash tariff rates. Treasury yields also fell, providing a tailwind to stocks.

The broad market index rose 0.41% to end at 5,916.93, while the Dow Jones Industrial Average added 271.69 points, or 0.65%, and closed at 42,322.75. The Nasdaq Composite underperformed, slipping 0.18% and settling at 19,112.32.

Confidence in the immediate outlook for stocks has strengthened in the wake of last weekend's talks between Treasury Secretary Scott Bessent and Chinese officials that appeared to stave off a short-term decline in economic activity and a ratcheting up in inflation.

Tech giants are putting up a strong showing week to date. Nvidia and Tesla are both up around 15% each, while Meta Platforms has added nearly 9% during the period. Amazon and Alphabet are up more than 6% and 7%, respectively. The Nasdaq Composite is higher by 6.6% this week, trailed by the S&P 500, ahead 4.5%, and the Dow, up 2.6%.

"This is a market that has shifted to cautious optimism, i.e., market sentiment has shifted toward measured optimism, as recession fears begin to recede and equity markets demonstrate underlying strength. However, a number of macro and micro risks continue to form a 'wall of worry' that investors must navigate," said Joe Cusick, senior vice president and portfolio specialist at Calamos Investments. "The next phase will hinge on whether the current rally can broaden and sustain through the summer months, or whether it gives way to a healthy consolidation or correction."

Shares of Foot Locker surged almost 86% after Dick's Sporting Goods said it planned to acquire the retailer for $2.4 billion. UnitedHealth slid nearly 11% after The Wall Street Journal reported, citing people familiar, that the Justice Department is probing the insurer. A UnitedHealth spokesman later told CNBC that the insurer has not been notified by the DOJ of the "supposed" investigation reported.

Traders also assessed the state of the economy on Thursday, with an unexpected decline in wholesale prices last month. The producer price index for April declined 0.5% month over month, the Bureau of Labor Statistics said. Economists polled by Dow Jones forecast PPI would increase 0.3% on the month.

Retail sales increased 0.1% in April, which matched consensus estimates, while industrial production numbers for April decreased slightly more than expected.

Bond yields slipped after the release of the soft inflation report. The 10-year Treasury yield slipped more than 8 basis points to 4.44%, while the rate on the 2-year note slid 9 basis points to 3.96%.