The technology-laden Nasdaq rose for the fourth straight session to its highest close in 2-1/2 years on Wednesday, aided by a bullish brokerage call on chip heavyweight Intel Corp.
Blue chips ended slightly lower, as investors took a cautious stance before key earnings and economic data later this week.
But the stock market's mood at Thursday's open might be subdued following news, after Wednesday's closing bell, of a mortar attack that wounded 35 US soldiers on a US base in Iraq.
Aluminium maker and Dow component Alcoa Inc will kick off the quarterly earnings season with its results on Thursday. On the economics front, investors will get a report on weekly initial jobless claims on Thursday, followed by the closely watched non-farm payrolls data for December on Friday.
"A lot of people are positioning themselves for the upcoming year, and technology appears to be in favour, judging by the Nasdaq's performance," said Joe Kalinowski, research director at Puglisi & Co, an institutional research and trading firm.
The Nasdaq Composite Index added 20.31 points, or 0.99 percent, to 2,077.68, its highest close since August 2, 2001.
The Dow Jones industrial average ended down 9.63 points, or 0.09 percent, at 10,529.03, according to the latest available data. But the broader Standard & Poor's 500 Index rose 2.66 points, or 0.24 percent, to 1,126.33.
Weakness in big oil and gas companies' stocks weighed on the broader market, as some investors sold shares to lock in recent gains amid concerns that energy prices could start to retreat from current high levels. The S&P integrated oil and gas companies index fell 0.82 percent.
Volume was heavy, with 1.7 billion shares changing hands on the New York Stock Exchange, and about 2.28 billion shares traded on the Nasdaq. Advancers outnumbered decliners by a ratio of 6 to 5 on the NYSE, and about 19 to 13 on Nasdaq.
Wall Street is growing more confident about the economy's resurgence and improved corporate profits in the upcoming earnings season.
Intel, the world's largest maker of computer chips, jumped $1.09, or 3.3 percent. to $33.99. It was the blue chip Dow's biggest percentage gainer and was among the most-active Nasdaq issues.
Bernstein Research raised its investment rating on the technology bellwether to "outperform" from "market perform."
But Alcoa was among the Dow's biggest losers, falling 29 cents or 0.75 percent to $38.20, a day before it releases earnings.
Nortel Networks Corp topped the NYSE's most active list, gaining 92 cents, or 19.3 percent, to $5.68.
The company struck a deal to supply Verizon Communications, the No 1 US phone company, with next-generation Voice Over Internet Protocol (VoIP) technology. Nortel's stock also got a boost after UBS Investment Research upgraded its rating on the company.
Circuit City Stores Inc shares fell sharply, after the retailer reported its December same-store sales fell from last year, disappointing investors who hoped to see its massive store remodelling effort pay off.
Shares of Circuit City, the No 2 US electronics chain, fell $1.18, or 11.7 percent, to $8.92. The company attributed the sales decline on weak demand for video games and stereos.