NEW YORK (CNN/Money) - Stocks closed higher Thursday, with buyers resurfacing after two days of declines amid encouraging comments from IBM and other technology companies and some positively-perceived economic reports.

Friday will bring substantial economic news. Reports on housing starts, building permits, and consumer prices are expected before the open, while the University of Michigan's consumer sentiment index is due shortly after trading begins.

April housing starts are expected to show a slight decline from the previous month, while building permits are expected to show a slight advance. Consumer prices are forecast to have fallen in April, while the preliminary sentiment reading is forecast to show a slight rise.

"This is going to be a positive year for the market, but the growth is going to be slow," said Michelle Clayman, chief investment officer at New Amsterdam Partners. "The quick resolution to the Iraq war has been a positive and I think people took a lot of encouragement from that, which is why you've seen the run we've had, but the economic news has been mostly mixed."

The major indexes all closed near their highs of the session. The technology push resulted in stronger gains for the Nasdaq composite (up 16.48 to 1551.38, Charts) than for the Dow Jones industrial average (up 65.32 to 8713.14, Charts) and the S&P 500 index (up 7.39 to 946.67, Charts).

Thursday's trade seemed to reinforce the belief that market sentiment has changed to the point where investors are willing to absorb mixed or bad news and resist the urge to sell heavily in response. This sentiment stems from a belief that the economy and corporate profitability will recover in the second half of the year.

Investors found positives in reports on weekly joblessness and producer prices. Readings on manufacturing also seemed to cheer investors following recent weak reports on the sector from the Institute for Supply Management.

Technology shares also provided some upside momentum, with IBM's CEO offering encouraging words on information technology spending and Computer Associates issuing an improved current quarter outlook.

After the close of trade, Dell (DELL: down $0.07 to $32.18, Research, Estimates) reported a first-quarter profit of 23 cents per share, in line with estimates and up from 17 cents a year earlier. But Dell also issued second-quarter revenue guidance that is slightly below current expectations. Shares lost 50 cents to $31.68 in after-hours trade.

Investors chose to focus on the positive in the week's jobless claims number, which showed a dip but remained above a key level, and producer prices, which fell sharply implying deflation, but also were interpreted to mean that a Federal Reserve interest rate cut could be en route.

The Fed already hinted at its deflation concerns in the release that followed its May 6 meeting. Moreover, the central bank indicated it is likely to keep interest rates low for a considerable period of time in an effort to stimulate economic growth, giving an unusual boost to both stocks and bonds. Traditionally, stronger economic growth translates into inflationary pressure and higher bond yields.

But that has not been the case this time. On Wednesday, the 30-year Treasury bond's yield fell to its lowest on record, and the 10-year note saw its yield at its lowest in 45 years.

In addition, investors looked to two key reports on regional manufacturing. The New York Fed's Empire State business sentiment index for May rose to +10.6 from -10.2 in April, better than expected. The Philadelphia Fed index showed a reading of -4.8 in May, still in negative territory but better than April's -8.8 reading and better than forecast.

Samuel Palmisano, the chief executive of IBM (IBM: up $1.20 to $89.90, Research, Estimates), told a group of analysts and investors Wednesday night that technology spending has stabilized compared with a year ago. The company's stock rose more than 1 percent.

Computer Associates (CA: up $2.07 to $20.26, Research, Estimates) rallied 11.4 percent and was one of the NYSE's most active issues after the software maker reported a narrower quarterly loss and an improved outlook late Thursday.

On the downside, shares of Brocade Communications (BRCD: down $0.94 to $5.57, Research, Estimates) fell 14.4 percent in active trade on the Nasdaq after the data storage networking company reported a quarterly loss, compared with a profit a year earlier.

"The market has traded sideways for the past few days and if we can see a few more days of this kind of consolidation, and the Dow can pull through the 8,750 level, you could see a huge spurt of buying with shorts jumping in," said Jack Baker, head of equities at Putnam Lovell Securities. "The Dow could easily hit 9,000."

Market breadth was positive on strong volume, with five stocks rising for every three that fell on the New York Stock Exchange and three issues advancing for every two that retreated on the Nasdaq. Nasdaq volume reached 1.95 billion shares, while some 1.43 billion shares changed hands on the NYSE.

Following Wednesday's historic rise, bond prices were little changed. The 10-year note fell 2/32 of a point, pushing its yield to 3.52 percent. The 30-year bond rose 15/32 of a point in price, its yield shrinking back to 4.48 percent.

The dollar gained more ground against the euro, but continued to ease against the yen.

Overseas, European markets closed mostly higher and stocks in Asia ended their day mixed.

Light sweet crude oil futures were weaker in New York, falling 37 cents to $28.41 a barrel. Also in New York, gold gained 30 cents to $352.80 an ounce, well off its highs of the morning.