An increase in Facebook pushed the Nasdaq to a record high on Friday and the S&P 500 also rose after major US banks kicked off the fourth-quarter earnings season with strong results.
Wall Street has surged since President-elect Donald Trump's unexpected election victory on optimism he will cut corporate taxes, spend on infrastructure and deregulate banks.
With stocks trading at price-to-earnings valuations well above historical averages, many investors believe further gains will depend on S&P 500 companies handing in strong report cards over the next several weeks.
Major banks on Friday did not disappoint: Bank of America, JPMorgan and Wells Fargo all posted quarterly profits above analysts' expectations. They also expressed optimism about 2017 in their first public comments about earnings since Trump won the election in November.
Their shares surged over 2 percent but later gave up most of those gains. Wells Fargo ended 1.36 percent higher and JPMorgan added 0.53 percent.
The S&P financial sector has jumped about 17 percent since the election, far outpacing the S&P 500's 6-percent rise.
"Earnings are key going forward, and we're off to a decent start," said Mike Baele, managing director with the Private Client Reserve of US Bank in Portland, Oregon.
The Dow dipped marginally, with Wal-Mart Stores and other consumer stocks down after a report showed US retail sales and core retail sales increased less than expected in December.
Trading volumes were light, with financial markets closed on Monday for Martin Luther King Jr. Day.
The Nasdaq Composite added 0.48 percent to a record-high close of 5,574.12, bringing its gain so far this year to 3.55 percent.
The Dow Jones Industrial Average slipped 0.03 percent to 19,885.73, while the S&P 500 gained 0.18 percent to 2,274.64.
For the week, the Dow fell 0.4 percent, the S&P 500 shed 0.1 percent and the Nasdaq gained 1 percent.
The biggest boost to the S&P 500 and the Nasdaq on Friday was provided by Facebook, which jumped 1.36 percent after Raymond James upgraded the stock.
The combined profit of S&P 500 companies is expected to have risen 6.2 percent in the fourth quarter, according to Thomson Reuters I/B/E/S.
The S&P 500 is trading at 17 times expected earnings, compared to its 10-year average of 14, according to Thomson Reuters Datastream.
"We've come a long way very quickly so there's scope for a pullback, but overall the outlook for 2017 is relatively positive," said Jon Adams, senior investment strategist at BMO Global Asset Management.
Bank stocks will stay in favour with investors as long as earnings reports in the coming week keep show an improving profit outlook while investors wait to see if Trump lives up to his campaign promises.
Advancing issues outnumbered declining ones on the NYSE by a 1.69-to-1 ratio; on Nasdaq, a 2.34-to-1 ratio favoured advancers.
The S&P 500 posted 31 new 52-week highs and three new lows; the Nasdaq Composite recorded 126 new highs and 14 new lows.
About 5.8 billion shares changed hands on US exchanges, lower than the 6.4 billion average in the last 20 sessions.
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