Economic data this past week added to evidence that the United States may stave off recession.
The Commerce Department said on Thursday the U.S. economy grew faster than initially measured in the first quarter as demand for foreign goods fell and commercial building picked up.
The robust data helped the market rebound from sharp losses in the previous week.
The Dow gained 1.3 percent and the S&P rose 1.8 percent. The Nasdaq was the outperformer of the week, climbing 3.2 percent.
Next week brings a heavy load of economic numbers for investors to consider, with Friday's jobs report the one that will garner the most attention.
"The May employment report will give us a clear indication on the impact on the economy from higher oil prices and credit conditions," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.
The direction of stocks has inversely tracked the price of oil recently, with a retreat in crude this week playing a big part in the market's gains.
Oil's record-setting run this year has fueled concerns about inflation and the impact of higher prices at the pump on spending power of the American consumer.
Gas prices will take on even more importance now that the summer driving season has begun and the hurricane season is on the horizon.
Oil's recent retreat from highs came amid concerns that increased surveillance of oil markets by federal regulator the Commodity Futures Trading Commission could shake some speculators out of the market.
"Key is whether the pull-back in oil that appears to have started over the past few days will continue over the weeks ahead," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut. "A combination of factors is helping stocks lately: one is the pull-back in oil prices and the other is the money flowing out of the bond market, which had previously been a safe haven out of equities."
The exodus out of bonds gained momentum this week, with the benchmark 10-year Treasury note suffering its biggest sell-off in five weeks.
Apart from the jobs number, there are also a couple of Institute for Supply Management reports, one on factory activity and the other on the services sector, which accounts for about 80 percent of the U.S. economy.
In a Reuters poll of economists, the median forecast is for a May payroll drop of 55,000 jobs, and an unemployment rate of 5.1 percent. In April, the economy shed 20,000 jobs.
The ISM manufacturing index, due on Monday, is expected to fall to 48.5 in May, from 48.6 in April. Any reading below 50 indicates contraction.
The non-manufacturing index, due on Wednesday, is expected to fall to 50.7 in May from 50.9 in April.
Other data points include April construction spending on Monday, April factory orders on Tuesday, the May ADP employment report on Wednesday, and weekly jobless claims on Thursday.
Among the handful of companies due to report earnings next week are wine and spirits company Brown-Forman , analog microchip maker National Semiconductor and communications equipment maker Ciena.
While the earnings season has all but ended, there were several positive surprises among the short list of companies that reported results this week.
Shares of women's apparel retailer Chico's FAS , close-out retailer Big Lots, luxury jeweler Tiffany & Co and computer maker Dell all got a big lift this week after each reported higher-than-forecast profits.
"If we can calm down financial markets and start to see the benefit from Fed policy, there will be some reversal from the flight-to-quality trade," said Jeffrey Layman, chief investment officer at BKD Wealth Advisors in Springfield Missouri.
"Treasuries are an extremely overbought security right now. We think equities still look much more attractive. I don't think it makes sense to head for the hills. It feels pretty good when you get data and earnings that aren't as bad as expected," he added.