Stocks finished higher across the board Friday with the Dow setting a new record high and all three major averages up more than 2 percent for the week, boosted by a stronger-than-expected monthly government payrolls number.
The Dow Jones Industrial Average rose 67.58 points, or 0.47 percent, to close at 14,397.07, finishing higher for the 10th consecutive Friday. Earlier in the session, the blue-chip index crossed above 14,400 for the first time.
(Read More: Stock Run Will End Badly This Year: Marc Faber)
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, closed below 13.
For the week, the Dow jumped 2.18 percent, the S&P 500 soared 2.17 percent, and the Nasdaq rallied 2.35 percent. Bank of America was the best weekly performer on the Dow, surging more than 6 percent, while Caterpillar lagged.
All 10 S&P sectors finished higher for the week, led by financials and consumer discretionary.
(Read More: Traders 'Trash' Talk Stocks Leading the Rally)
The U.S. added 236,000 jobs in February, while unemployment rate tumbled to 7.7 percent, the lowest since December 2008, according to the Labor Department, blowing past expectations for a gain of 160,000 and a rate of 7.9 percent.
"Overall, the number was uniformly strong and it shows the economy continues to be on the mend," said Paul Zemsky, CIO of multi-asset strategies at ING U.S. Investment Management. "But [stocks have] come quite far in a short amount of time so we're pausing a little bit…Today's move certainly doesn't make me bearish on the market and I still see significant upside ahead."
Investors watch the nonfarm payrolls number as a measure of economic recovery and to discern the Federal Reserve's policy moves. The central bank has said it will maintain its low interest rate rate policy at least until unemployment falls to 6.5 percent and inflation rises to 2.5 percent. However, the Fed's bond buying will likely stop well ahead of that if the Fed sees signs of sustained growth.
(Read More: Cramer: Market Has 'Great Faith in Bernanke')
"It's way too premature to think about the Fed pulling back—the Fed needs to be absolutely certain that the economy is on the mend," said Zemsky.
Shortly after the European market close, Fitch downgraded Italy's credit rating to BBB from A- with a negative outlook, citing the uncertainty from February's inconclusive election results.
McDonald's said its same-store sales in February dipped 1.5 percent as consumers grew more cautious due to weak economic growth and higher taxes. Still, shares gained as the result beat expectations.
Among earnings, Foot Locker posted earnings that matched Wall Street expectations, while revenue edged past estimates. Still, shares tumbled.
Pandora surged after the music-streaming service edged past earnings and revenue expectations and handed in current-quarter and full-year 2014 revenue guidance that were better than Wall Street estimates. In addition, the company said its board has formed a search committee to look for a new CEO. At least six brokerages boosted their price target on the company.
Skullcandy plunged more than 20 percent after the headphone maker posted earnings that missed expectations and warned that it expects to see a loss in the first quarter, disappointing analysts who had expected a gain.
Goldman Sachs and Morgan Stanley slumped after the Federal Reserve's latest stress test results revealed that both companies were near the bottom of the list of banks surveyed in terms of capital on hand. The only other bank that could see its capital fall below 6 percent under the stress scenario was Ally Financial.
Meanwhile, Citigroup rallied after the Fed said the company was one of the best banks poised to weather another financial crisis. In addition, Citi announced it had made a request to the Fed to repurchase up to $1.2 billion of its common equity, roughly the same amount it issues in employee stock each year. It did not request a raise to its $0.01 dividend.
Also on the economic front, wholesale inventories rose 1.2 percent in January, according to the Commerce Department. Economists polled by Reuters expected a gain of 0.3 percent. Meanwhile, sales at wholesalers declined 0.8 percent, against expectations for an increase of 0.1 percent.
In Asia, Japan's Nikkei jumped to a new four-and-half-year high in Friday's session, thanks to the yen's decline and revised growth figures showing the Japanese economy stabilized in the fourth quarter of 2012 after two quarters of a shallow recession.
China posted strong trade data which showed exports rising 22 percent in February from a year ago, though imports were weaker than forecast.
(Read More: Stroll Through the Ghost Cities of China)
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
On Tap Next Week:
MONDAY: Earnings from Dick's Sporting Goods, Urban Outfitters
TUESDAY: NFIB small biz optimism index, 3-yr note auction, Treasury budget, Chevron analysts mtg; Earnings from Costco
WEDNESDAY: Mortgage applications, retail sales, import/export prices, business inventories, oil inventories, 10-yr note auction; Earnings from Express
THURSDAY: Jobless claims, PPI, current account, Fed Governor Raskin speaks, natural gas inventories, 30-yr bond auction, Fed balance sheet, money supply, Samsung Galaxy S4 release; Earnings from Aeropostale
FRIDAY: Quadruple witching, CPI, Empire State mfg survey, Treasury int'l capital, industrial production, consumer sentiment, credit card default rates
More From CNBC.com: