Dow Rallies to 14,000, but S&P Snaps 7-Week Win Streak; H-P Soars 12%

Stocks finished near session highs Friday, recovering from a two-day slump, lifted by upbeat economic data from Europe and after comments from St. Louis Fed President James Bullard that the central bank's aggressive easy money policy will stay for a "long time."

The Dow eked out a slim weekly gain, avoiding its third-consecutive weekly decline. Meanwhile, the S&P 500 posted its first weekly loss this year, snapping its seven-week win streak.

(Read More: Pros: Is Market Bouncing or Turning Higher?)

"We're seeing some signs that the weekend anxiety is not that heavy," said Art Cashin, director of floor operations at UBS Financial Services. "We have the Italian election coming up [this weekend] and a sign that I look at is the U.S. dollar—it was higher this morning on some anxiety and there was a bit of a flight to safety in Treasurys, but that's abating and that's telling me that [the market's] not too concerned about the weekend so that's why we're having a good rally."

U.S. Major Index Performance

	Last	Change	Today's % Change	1 Week % Change	YTD % Change
Dow	14,000.57	119.95	0.86%	0.13%	6.84%
S&P 500	1515.6	13.18	0.88%	-0.28%	6.27%
NASDAQ	3161.82	30.33	0.97%	-0.95%	4.71%
Russell 2000	916.15	10.75	1.19%	-0.76%	7.86%
CBOE VIX	14.17	-1.05	-6.90%	13.72%	-21.37%

The Dow Jones Industrial Average rallied 119.95 points, or 0.86 percent, to finish at 14,000.57, led by Hewlett-Packard and Home Depot. Interestingly, the blue-chip index has so far posted a gain every Friday of this year, matching the Friday win streak from July through September of 2012.

The S&P 500 jumped 13.18 points, or 0.88 percent, to close at 1,515.60. And the Nasdaq advanced 30.33 points, or 0.97 percent, to end at 3,161.82. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell near 14.

For the week, the Dow squeezed out a gain of 0.13 percent, the S&P 500 slipped 0.28, and the Nasdaq declined 0.95 percent. Hewlett-Packard was the strongest weekly performer, while Alcoa tumbled.

Among the key S&P sectors, consumer staples led the gainers for the week, while materials lagged.

Meanwhile, traders said leaked reports that Fed Chairman Ben Bernanke has been downplaying worries that quantitative easing has spawned asset bubbles also helped lift markets.

Bernanke is scheduled to testify before lawmakers next Tuesday and Wednesday.

Earlier, St. Louis Federal Reserve President James Bullard said the Fed remained committed to aggressive easing measures in the form of its $85 billion a month bond-buying program.

(Read More: Pimco's Gross: Fed Not Vigilant Enough)

"It's true that the committee is thinking about how are we going to handle this later this year, but that's a natural thing for the committee to be talking about," Bullard told CNBC's "Squawk Box." "Fed policy is very easy and it's going stay easy for a long time."

Uncertainty about the future of the central bank's bond buying program weighed on the stock market in the last two days.

Minutes from the Fed's meeting in January, released on Wednesday, showed policymakers were growing concerned about the impact of quantitative easing, suggesting the central bank may taper off its $85 billion per month purchases earlier than expected.

(Read More: Don't Exit Market Due to Fed: Brown)

Among earnings, Abercrombie & Fitch posted earnings that easily beat expectations, while revenue fell slightly short of estimates and the company handed in full-year 2013 earnings guidance that missed expectations. Meanwhile, the firm increased its quarterly dividend to 20 cents a share from 17.5 cents a share. Shares tumbled to lead the S&P 500 laggards.

Hewlett-Packard soared to lead the S&P 500 gainers after the computer hardware giant easily topped Wall Street expectations and handed in current-quarter and full-year earnings guidance that topped forecasts. At least three brokerages lifted their price target on the company.

(Read More: Expect HP Revenue Growth in 2014: Whitman)

Texas Instruments jumped to lead the Nasdaq 100 gainers after the chipmaker raised its dividend by 33 percent and boosted its stock buyback program.

Darden warned it expects to see third-quarter earnings of between $1 a share and $1.02 a share, against current Wall Street expectations for $1.12 a share, hurt by economic headwinds, including rising gas prices and higher payroll taxes.

European shares ended broadly higher following positive economic news from Germany and ahead of Italy's general election this weekend.

German business sentiment jumped at its fastest rate since July 2010 in February, suggesting the country is rebounding after its weak fourth quarter.

U.S. President Barack Obama will meet with Japanese Prime Minister Shinzo Abe in Washington. Abe is expected to seek support for the hyper-easy monetary policies he has instigated to revive Japan's ailing economy.

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

On Tap Next Week:

MONDAY: Chicago Fed nat'l activity index, Dallas Fed mfg survey, 2-yr note auction, Fed's Lockhart speaks, USDA food prices outlook; Earnings from Hertz, Lowe's, Autodesk
TUESDAY: FHFA housing price index, S&P Case-Shiller home price index, new home sales, Richmond Fed manufacturing index, Ben Bernanke speaks, 5-yr note auction, JPMorgan Chase investor day; Earnings from Home Depot, AutoZone, Macy's, Saks, Priceline.com, TiVo
WEDNESDAY: Weekly mortgage applications, durable goods orders, Ben Bernake speaks, pending home sales, oil inventories, 7-yr note auction, Apple shareholders mtg, Coinstar shareholders mtg; Earnings from Target, Dollar Tree, TJX, Groupon, JCPenney, Limited Brands, Monster Beverage
THURSDAY: GDP, jobless claims, Chicago PMI, natural gas inventories, Fed's Raskin speaks, Farm Prices, Fed's Fisher speaks, Fed's Evans speaks, Oppenheimer investor mtg; Earnings from Best Buy, Kohl's, Sears, Barnes & Noble, Gap, Salesforce.com
FRIDAY: Personal income & outlays, PMI manufacturing index, consumer sentiment, ISM mfg index, construction spending, Ben Bernake speaks, auto sales; Earnings from Foster Wheeler

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