Stocks advanced Friday as Disney's earnings beat and JCPenney's outlook helped offset worries about a drop in consumer sentiment.
Stocks started the day higher, then retreated briefly before rallying toward the closing bell.
The Dow Jones Industrial Average gained 73 points, or 0.7 percent, to close at 10,270.47, its highest close since Oct. 2008. For the week, the Dow gained 2.5 percent.
The S&P 500 rose 0.6 percent and the Nasdaq advanced 0.9 percent today.
Disney was the biggest gainer on the Dow, up 4.8 percent, after the entertainment giant beat expectationsfor both earnings and revenue after the bell Thursday.
McDonald's and American Express rounded out the Dow's top three. AXP, which is one of Warren Buffett's key holdings, has doubled since the start of the year.
J.C. Penney jumped 6.2 percent after the department-store operator reported its profit fell but raised its full-year forecast.
This came a day after Wal-Mart beat earnings expectations but delivered a light holiday forecast.
Elsewhere in retail, teen chain Abercrombie & Fitch, which has been hard hit by the recession, beat earnings expectations. High-end retailer Nordstrom missed Wall Street's profit target but raised its full-year outlook.
Next week, we'll get more insight on the retail sector, with earnings from Lowe's, Home Depot, Target, TJX, BJ's Wholesale, Sears and Gap, among others.
How should you play this week's news and what's on tap for next week? Click on the video at left.
JPMorgan shares slipped 0.9 percent after CEO Jamie Dimon said no bank should be considered too big to fail. Such an idea is "politically, economically and ethically bankrupt,'' Dimon wrote in an op-ed in the Washington Post.
Dollar General rallied 8.2 percent in its debut on the New York Stock Exchange. Shares priced last night at $21 a share. The IPO raised $716 million.
Qualcomm shares rose 2.1 percent after Wells Fargo upgraded its rating on the stock to "outperform." The stock is a good way to play all the smartphonesif you don't want to call a winner, since their chips are in most smartphones, Morgan Keegan analyst Tavis McCourt said earlier this week on Fast Money.
In the day's economic news: Reuters and the University of Michigan reported their gauge of consumer sentiment dropped to 66 in November, its lowest level in three months and well below the 71 economists had expected.
Earlier, a report showed the US trade deficit swelled to its highest level in more than 10 yearsas import prices climbed 0.7 percent.
The economic news was good from overseas: Germany and France both logged their second straight quarters of growth. And IMF managing director Dominique Strauss-Kahn said he doesn't see a double-dip recession.
And some big M&A news: British Airways and Iberia announced a $7 billion merger that would create the world's third-largest airline by revenue.
And, Liberty Global is planning to acquire Unity Media, Germany's No. 2 cable operator in a deal worth $3 billion.
An interesting deal on this side of the pond: Playboy is apparently in talks to sell itself to Iconix , which owns the Candies, Joe Boxer and Rocawear brands.
Ten out of 10 key S&P sectors finished higher this week, led by materials, which jumped over 4 percent. Energy was the at the bottom of the pack, up just 0.2 percent.
IBM had the most positive impact on the Dow this week, up nearly 3 percent. Investors are closing watching IBM and Cisco to see what they're going to do in the wake of the H-P 3Com deal.
JPMorgan was the biggest drag on the Dow this week, down 1.3 percent.
Oil lost more than 1 percent this week, finishing the week at $76.35 a barrel, after Saudi Oil Minister Ali al-Naimi says the Saudis will double their oil refining capacity by 2015.
Gold settled around $1,116.70 an ounce, after touching an all-time peak of $1,122.85 yesterday, and the dollar gained against the euro and the yen.
On Tap for Next Week:
MONDAY: Government's report on retail sales; Bernanke speaks; Earnings from Lowe's
TUESDAY: PPI; industrial production; Fed's Lacker, Pianalto speak; Geithner speaks; NAHB housing index; Earnings from Home Depot, Target and TJX
WEDNESDAY: Weekly mortgage applications; CPI; housing starts; weekly crude inventories; Earnings from BJ's, Limited
THURSDAY: EU chooses new president; Fed's Plosser, Fisher speak; Ghosn, Rattner speak; weekly jobless claims; leading indicators; Philly Fed; Geithner speaks; Earnings from Sears, Dell, Gap
FRIDAY: Fed's Plosser speaks; state-by-state jobs report
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