U.S. stocks closed higher on Thursday as investors digested a batch of economic data as well as retail giant Target's brighter outlook.

The Dow Jones Industrial Average added 20.95 points, or 0.10 percent, to 21,553.09, notching a record close. The S&P 500 gained 4.58 points, or 0.19 percent, to 2,447.83. The Nasdaq Composite Index increased 13.27 points, or 0.21 percent, to 6,274.44.

In the week ending July 8, the advance figure for seasonally adjusted initial claims was 247,000, a decrease of 3,000 from the previous week's revised level, the Labor Department said Thursday.

In a separate report, the department said that the seasonally adjusted Producer Price Index for final demand increased 0.1 percent in June, seasonally adjusted, above economists' expectations. Final demand prices were unchanged in May and rose 0.5 percent in April.

In corporate news, Target said it now expects to see a modest increase in second-quarter comparable-store sales, providing a rare boost for brick-and-mortar retailers.

Target added it expects second-quarter earnings to come in above the high end of the forecast. Shares of the retailer surged 4.74 percent to 53.28 U.S. dollars apiece.

Shares of Wal-Mart, a Dow component, rose 1.49 percent to 75.05 dollars apiece following the news.

Meanwhile, Federal Reserve Chair Janet Yellen testified before Congress for the second day.

She said that the Trump administration's goal to achieve three percent GDP growth shortly would be "challenging," because productivity growth is very difficult to move.

On Wednesday, Wall Street cheered over Yellen's view of gradual increase in rates. The Dow, the S&P 500, and the Nasdaq gained 0.57 percent, 0.73 percent, and 1.10 percent respectively.

Yellen said that the central bank is likely to start reducing its massive 4.5-trillion-dollar balance sheet later this year. The Fed bolstered the balance sheet as a way to stimulate the economy during and after the financial crisis.

She added the Fed is monitoring low inflation as it remains one of the major uncertainties in the economic outlook.