NEW YORK ( TheStreet) -- Things have gotten so good for stocks these days that Bank of America ( BAC) was able to weather its latest fee kerfluffle with a nearly 2% gain.

Despite spiking oil prices, the major U.S. equity indices kept their measured pace up on Thursday, bouncing back after Federal Reserve Chairman Ben Bernanke pulled off the neat trick of seemingly souring the prospects for both stocks and gold by possibly laying some very preliminary groundwork for taking QE3 off the table.

Julian Jessop, an analyst with Capital Economics, said Thursday the market's reaction on Wednesday revealed a "surprising fragility in the prices of risk assets."

"This makes one wonder whether investors would have been happier if the Fed Chairman had talked down the economy and suggested that further monetary stimulus will be required," he wrote. "Perhaps they would -- after all, markets welcomed the FOMC statement in January which effectively said that the recovery was sufficiently delicate that official interest rates would probably have to remain at ultra-low levels until at least late 2014."

Going forward, Jessop thinks those bullish about stocks may have a rude awakening ahead because they can't realistically expect to get the benefit of both an improving economy and another round of stimulus.

"The one lesson we would draw is that if equity investors are banking both on stronger economic growth and further monetary easing to support current valuations, they are almost certain to be disappointed," he said.

The drop in gold was a bit puzzling as well to Jessop. He thinks the yellow metal still has plenty of room to run because of an expectation that financial conditions in Europe will still get worse before they get better.

"It is the risk of a renewed escalation of the eurozone crisis that underpins our forecasts that the price of gold will climb as high as $2,500 per oz over the next two years, and silver to $42, from around $1,710 and $36 respectively now," he wrote. "These forecasts are based on demand for a refuge from the uncertainty that the exit of one or more euro members would cause, rather than dependent on further QE from the Fed. But the latter is still on the cards for later in the year and would help the prices of precious metals to recover too."

Meantime, the bulls just get more bullish. UBS strategist Jonathan Golub lifted his year-end target for the S&P 500 by 8% on Thursday to 1475. Golub's previous projection was 1325, which represented 5.3% appreciation from 2011's close at 1258. He cited an improved macro environment for the move, saying current conditions support increases in both stock prices and corporate earnings.

"The most dramatic shift in market conditions has been the result of central bank actions including LTRO the European Central Bank's long-term refinancing operation , increased swap lines to the ECB and an extension of the Fed's 'low rate' promise," Golub wrote. "Nearly 100% of the recent run can be attributed to multiple expansion on the back of these actions, with the market's P/E moving to 12.6x from 10.2x. We believe multiples can drift higher."

With the S&P 500 closing Thursday at 1374, the forecast is calling for 7%-plus appreciation from here. Golub listed his reasons for raising the firm's earnings expectations for the S&P 500 as "(1) better U.S. economic data; (2) less severe results in Europe; (3) higher oil prices (a positive at current levels); and (4) reduced financial sector stress."

As for what worries Golub, it's still a shift in the headlines from overseas.

"Our greatest concern is that macro headwinds will reassert themselves sending volatility higher from currently low levels," he wrote. "The most likely of these risks is a continuation of the Greek saga or higher oil prices on Iranian concerns."

One very good sign for the markets though is that bank stocks seem to finally be getting some credit for the increase in commercial and industrial lending that's been building over the last two years. The KBW Bank Index ( BKX) closed Thursday at 45.79, up more than 16% on the year with

The aforementioned Bank of America was the top percentage gainer in the Dow in February by a pretty wide margin, rising 11.8% vs. an advance of 7.9% for the next biggest winner, Walt Disney ( DIS).

Evercore Partners reiterated an overweight rating on Bank of America earlier this week, saying it came away from a meeting with Chief Financial Officer Bruce Thompson thinking that the company is making "significant progress in righting the ship."

"Overall, we came away feeling incrementally better about BAC in terms of confidence regarding capital adequacy, mortgage issues moving in right direction, operating environment incrementally better in terms of activity and opportunity, and expense flexibility," the firm said.

Valuation still looks attractive, according to Evercore, which said that, despite the nearly 44% year-to-date gain, the stock is trading at 0.6X tangible book value and at a forward price-to-earnings multiple of 6.5X vs. 1.3X and 8.8X respectively for its peers.

While the operating environment seems to have gotten a little better with improving credit spreads and higher sequential trading volumes, Evercore still expects the bank's capital markets business will be mixed and said net interest margins will remain under pressure.

Most of Wall Street hasn't come around to Evercore's way of thinking yet though with 22 of the 31 analysts covering Bank of America at hold (21) or underperform (1), and the 12-month median price target at $8.25.

Check out TheStreet's quote page for Bank of America for year-to-date share performance, analyst ratings, earnings estimates and much more.

As for Friday's scheduled news, there's no major economic data on the way, and just a smattering of quarterly reports. Big Lots ( BIG) is on the docket to deliver its fiscal fourth-quarter results before the opening bell, and the average estimate of analysts polled by Thomson Reuters is for a profit of $1.73 a share in the January-ended quarter.

Shares of the Columbus, Ohio-based closeout retailer have surged in 2012, rising more than 16% year-to-date and hitting a 52-week high of $44.82 on Wednesday. Part of the impetus for the buying was the company's rundown of fourth-quarter topline performance on Feb. 2 when it reported same-store sales rose 3.4%, well above its guidance for 1-2% growth. Retail sales for the three months ended Jan. 28 came in at $1.62 billion, up 7.7% from the comparable year-ago period.

At that time, Big Lots lifted its earnings outlook for the quarter to between $1.71 to $1.74 a share, up from a previous projection of $1.59 to $1.66 a share, saying it executed well during the holiday selling season and that its decision to be "aggressive in certain key categories was successful."

The sell side is mostly bullish with 10 of the 16 analysts covering the stock at either strong buy (5) or buy (5), and the 12-month median price target at $47.50, implying potential upside of 6.8% from Thursday's close at $44.49.

Benchmark previewed the quarter on Thursday, saying it's looking for a penny beat from the company, mainly from leveraging selling, general and administrative expenses. The firm, which has a buy rating on the stock with a $53 price target, estimates the company's acquisition of Canadian company Liquidation World last year will reduce earnings by 5 cents a share in the quarter but it's in favor of the deal from a big-picture perspective.

"While Canada may produce a loss this quarter, we believe Big Lots made a sound investment in its future with the Canadian acquisition," Benchmark said. "Given the solid balance sheet, cash flow, profitability, improving store base, and expanding customer base, which could lead to years of revenue growth, along with possible upside from share repurchases, we maintain our price target of $53, based on 16x our 2012E EPS and 8x our 2012E EBITDA (earnings before interest, taxes, depreciation and amortization), and maintain our Buy rating."

Check out TheStreet's quote page for Big Lots for year-to-date share performance, analyst ratings, earnings estimates and much more.

Other companies slated to report on Friday include EDGAR Online ( EDGR), Overstock.com ( OSTK), Superior Industries ( SUP), Teavana Holdings ( TEA).

And finally, the after-hours session was a busy one on Thursday with Shutterfly ( SFLY) making a strong move higher on news that it's grabbed pole position in the quest to snap up the online photo business of Eastman Kodak, which is undergoing bankruptcy reorganization.

Other stocks attracting trading interest were Ascena Retail Group ( ASNA), which jumped on a better-than-expected earnings report and a higher full-year outlook; and Zynga ( ZNGA), whose shares built on a 10% gain in the regular session following news that it's launching its own online destination for social media gaming.

-- Written by Michael Baron in New York.

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