Stocks closed higher for a fourth straight week Friday, extending a September rally with huge daily gains fueled by optimism over the future direction of the economy.
The Dow Jones Industrial Average was up 8.4 percent so far this month, putting the blue-chip index on track for the best September performance since 1939.
On Friday, the Dow rose 197.84 points, or 1.9 percent, to close at 10,860.26. For the week, the Dow was up 2.38 percent.
All 30 Dow components were higher throughout Friday's session, led by Caterpillar , Alcoa,, and General Electric .
Caterpillar had the most impact on the Dow this week, adding more than 50 points to the index; Disney, , meanwhile, dragged the index down 7.5 points.
The upbeat tone to the market came after three lackluster sessionsstalled a rally in the markets that had dominated most of September.
The S&P 500 is up 9.5 percent for the month, also putting the index on track for the best September performance since 1939. On Friday, the S&P 500 rose 23.8 points, or 2.1 percent, to close at 1,148.67. For the week, the index was up 2 percent.
The Nasdaq is up 12.6 percent for the month, on track for the best September performance since 1998. The index rose 54.14 points on Friday, or 2.3 percent, to close at 2,381.22. For the week, the Nasdaq rose 2.8 percent.
The CBOE Volatility Index, widely considered the best gauge of fear in the markets, plunged nearly 9 percent to trade below 22.
The top 10 key S&P sectors were higher for the week, led by consumer discretionary stocks, which gained 2.6 percent. For the month, all 10 key sectors are higher as well, led by technology stocks, up almost 13 percent for the month.
Industrials Alcoa and Caterpillar were among several multinationals getting a boost from the weakening dollar. In addition, Credit Suisse reiterated an "outperform" rating on Caterpillar and raised a price target on the shares to $95 from $85.
The first indication stocks would move higher today came out of Europe, when Germany reported business sentiment rose unexpectedly. That bodes well for U.S. industrial companies, which are among the sectors leading the market's surge Friday, said Quincy Krosby, market strategist at Prudential Financial.
"The market just wants to know that we are not headed for an imminent double-dip recession," Krosby said.
Early in the session, hedge fund manager David Tepper said he was buying stocks, a statement some analysts attributed to a surge in the markets before the opening bell.
Citigroup shares were higher after the bank's board said it would raise CEO's Vikram Pandit's salaryabove the token $1 he has received for the last two years.
Other industrial stocks on the rise included CSXand Norfolk Southern , which advanced almost 3 percent each, even after BB&T Capital lowered its rating on the railroad operators to "hold" from "buy."
Shares of GE and Comcast remained higher after news that Jeff Zucker, CEO of GE's NBC Universal unit, will step down after NBC's merger with Comcast. CNBC.com is a division of NBC Universal.
Shares of Amazon.com jumped after JPMorgan raised its earnings-per-share estimates for the Internet retailing giant for 2010 and 2010, and issued a price target of $198 for the company for the end of 2011, up from $154.