By Karen Langley and Anna Hirtenstein

Major U.S. stock indexes climbed Friday to close at all-time highs, notching modest weekly gains.

Stocks hovered in record territory this week, buoyed by expectations for a fresh round of stimulus spending, strong corporate earnings and progress in the rollout of Covid-19 vaccines. In one development, President Biden said the U.S. has struck deals to buy another 200 million vaccine doses.

The week also brought reassurance that monetary policy is likely to continue supporting markets and the economy, with Chairman Jerome Powell saying Wednesday that the Federal Reserve is unlikely to consider raising rates or reducing bond purchases for the foreseeable future.

"Will stocks move upward forever? No. But for the moment, the ingredients are there for a rising stock market," said John Augustine, chief investment officer at Huntington Private Bank.

The S&P 500 rose 1.2% for the week, while the Dow Jones Industrial Average added 1%. The tech-heavy Nasdaq Composite advanced 1.7%.

In Friday's trading, the S&P 500 gained 18.45 points, or 0.5%, to 3934.83, its 10th record close of 2021. The Dow Jones Industrial Average edged up 27.70 points, or 0.1%, to 31458.40, its 7th record close of the year. The Nasdaq Composite rallied 69.70 points, or 0.5%, to 14095.47, its 12th record close this year.

The S&P 500 has risen 4.8% in 2021, while the Nasdaq Composite has gained 9.4%. The Russell 2000 index of small-cap stocks, which tend to do well when the economy is strengthening, has advanced 16% in the new year.

After the recent march higher, some investors caution that stocks are looking pricey, potentially muting future returns even if positive news continues to arrive. The S&P 500 traded Thursday at 22.42 times its projected earnings over the next 12 months, above a five-year average of 17.95.

"We are at some reasonably stretched valuations," said Jason Pride, chief investment officer for private wealth at Glenmede. "I think if we didn't have those sort of valuations, the market probably would be up more on these sort of news items."

Investors also are grappling with the evolving circumstances of the pandemic, as new variants of the virus and hurdles faced by vaccination programs cloud expectations for the timing of economic recovery.

"In the short term, it remains unclear when lockdowns will end, and whether consumers will rush out to spend on travel and entertainment when they are free to do so," said Willem Sels, chief investment officer of HSBC Private Banking and Wealth Management.

Still, Mr. Sels remains optimistic about the prospects for growth. "Stock markets tend to look ahead and should be supported by the prospect of the global reopening," he said.

As the corporate earnings season slowly winds down, investors have been cheered by stronger-than-expected reports. With results in from about three-quarters of S&P 500 companies, more than 80% have surpassed estimates, according to FactSet. Profits from companies in the stock index are expected to have grown 2.8% in the fourth quarter from a year earlier, a sharp improvement from the decline of more than 9% projected at the end of December.

"Stock prices tend to follow the direction of corporate profits over time," said Michael Sheldon, chief investment officer at investment advisory firm RDM Financial Group. "So the fact that corporate profits have been improving I think is encouraging."

Among individual stocks, dating app Bumble rose $5.15, or 7.3%, to $75.46 Friday after surging 64% in its trading debut Thursday. PayPal added $13.34, or 4.7%, to $298.37 after it said it expects to nearly double its active accounts by 2025. HubSpot, a software company, soared $70.64, or 16%, to $502.40 after it reported a jump in revenue in the fourth quarter.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note ticked up to 1.199% Friday, from 1.157% Thursday.

Overseas, the pan-continental Stoxx Europe 600 rose 0.6%. In Asia, Japan's Nikkei 225 slid 0.1%. Australia's SPX/ASX 200 Index declined 0.6% as a five-day lockdown was imposed in the state of Victoria. Some markets in the region including China, Hong Kong and South Korea were closed for the Lunar New Year and other holidays.

Write to Karen Langley at karen.langley@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

02-12-21 1722ET