U.S. stocks jumped on Friday, with benchmark indexes turning higher for the week, on signals of reduced tensions in the Russian-Ukraine crisis and as Wall Street viewed American military moves in Iraq as limited.
Reuters, citing Russia's Interfax, reported that Russia had ended military exercises near the Ukrainian border. The war games, which began Monday, were scheduled to end Friday, according to media reports including the Guardian.
"This is a good excuse to work off an oversold condition," said Peter Boockvar, chief market analyst at the Lindsey Group, who questioned whether the development truly shed any light on Russian President Vladimir Putin's intentions.
The CBOE Volatility Index, a measure of investor uncertainty, fell 5.3 percent to 15.77.
Ahead of Friday's open, stock-index futures had fallen on word President Barack Obama had authorized air strikes in Iraq, only to turn higher on reports that Russia might to be looking to de-escalate tension over Ukraine.
"Iraq is a tragedy, but the president made clear our engagement is going to be limited. While the markets always sell off immediately in the face of uncertainty, it doesn't take long to realize this airstrike against ISIS (Islamic State in Iraq and Syria) doesn't change the geopolitical picture in any significant way," said David Kelly, chief market strategist at J.P. Morgan Funds.
"We've been in a corrective mode over the last two weeks, but I don't think the geopolitical risks have become noticeably worse, and the earnings season, which should matter the most, has turned out to be good," said Kelly.
There's a disconnect for average Americans and Wall Street's gains, as "it feels like this has been a lousy economy, and the market is up a lot, so people think it must be overvalued, but that is not true. This is the type of economy that helps corporate earnings much more than the individual. It may not feel great, so it's natural to assume the market is too expensive, but we don't think it is, based on the numbers," Kelly said.
The Pentagon's press secretary said via Twitter on Friday that U.S. military aircraft had struck rebel artillery that was being used against Kurdish forces defending a position near American personnel. American officials told NBC News on Friday afternoon that U.S. military warplanes had launched another round of airstrikes against an Islamic State target in Iraq.
"Does that speak to an escalation of tension, or a resolution in that geopolitical hot spot; there's an argument to be made for the latter," Art Hogan, chief market strategist at Wunderlich Securities, said of the U.S. military action in Iraq.
Stock-index futures had risen on a news report signaling Russia might be looking to de-escalate the Ukraine conflict, offsetting declines that came with President Barack Obama's decision to authorize airstrikes in Iraq.