Meanwhile, the S&P 400, a mid-cap index, closed at an all-time high of 931.07. The previous closing high of 926.23 was on July 13, 2007.
The Nasdaq rose 52.13 points this week, or 1.93 percent, to close at 2,755.30, its highest close since Nov. 6, 2007. On Friday, the tech-heavy index added 20.01 points, or 0.7 percent.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to 15.40.
BP shares climbed on news the oil giant may announce a share swap with RosneftRussia's state-owned oil producer.
The market continued to move higher Friday even as some analysts cited current levels as unsustainable. In his morning note, Art Cashin, director of NYSE floor operations for UBS Financial Services, noted the S&P 500 has not fallen below its 10-day moving average for thirty straight trading days.
But Jeff Rubin at Birinyi Associates, citing another analyst who called the market overbought because the S&P 500 has traded above its 50-day average for 94 days, noted that when this has happened in the past, the market rose 1.58 percent in the next month, on average and 3.45 percent in the next three months, on average.
Howard Ward, portfolio manager of Gamco Growth Fund, said on CNBC, however, that with the S&P 500 up 22 percent since late August, the market is due for a correction. "And we’re going to have plenty of excuses for that, whether it’s municipal bond funding, European debt crisis, disappointing jobs reports, earnings or earnings guidance," Ward said.
Ward advised investors to “take their foot off the accelerator” and to avoid the big winners from 2010.
“Try to find stocks that haven’t had a big move—buy low and sell high,” he said, naming companies such as Google and GE (CNBC's parent company).
The story of the day was in the financial sector as investors cheered asurprisingly strong earnings reportby JPMorgan . The earnings release showed capital ratios for the leading U.S. bank appear strong enough to allow JPMorgan to increase its dividend once it receives Federal approval.
Once the "weak sellers," who panicked and sold after JPMorgan's earnings release got out of the way, investors began buying the bank's shares, as well as the shares of its peers, Dave Rovelli, managing director of equity trading at Canaccord Genuity told CNBC.com.
"People want to be in these financials, because (they have) the most potential for upside," Rovelli said.
A slew of big banks are slated to post earnings next week including Citigroup, Goldman Sachs, Wells Fargo, Morgan Stanley and Bank of America.
Financials have been the biggest market driver in recent weeks. The KBW Bank Index ticked higher. Since the start of December, the index has surged more than 20 percent.
The dollar traded flat against a basket of currencies, while gold fell about $8 tosettle just above $1,360 an ounce, after the Chinese central bank took another step toward monetary tightening, a move that got U.S. markets off to a shaky start as well.
Materials fell following the news, with Newmont Mining and AK Steel both trading lower.
AIG skidded more than 5 percent after the recapitalization of bailed-out insurer closed, leaving the government with a 92 percent stake and plans to sell its shares quickly. The recapitalization was intended to simplify AIG's $182 billion bailout by paying off the Fed and leaving the U.S. Treasury as AIG's majority owner. The Treasury said on Friday its cash investment in AIG is now $68 billion.
And while Intel slumped even after the tech giant reported strong profits and sales, news that the firm plans significant capital expenditures sent the semiconductor equipment index soaring. Meanwhile, at least 12 brokerages raised their price targets on the firm.
The Philadelphia Exchange Semiconductor Sector Index rose more than 2 percent, to a three-year high, while more than 80 percent of the semiconductor equipment makers in the S&P 500 subsector advanced, including Novellus , Altera and KLA-Tencor . Gleacher, meanwhile, raised its rating on Altera to "buy" from "neutral," and its price target to $4 a share from $32.
Meanwhile, popular online sites Groupon and Pandora are pursuing IPOs valued at $1 billion or more and $100 million, respectively, people familiar with the matter told CNBC. The IPOs could occur as early as spring. Pandora Media reportedly selected Morgan Stanleyto lead its offering of about $100 million, according to CNBC.
Groupon recently turned down a bid from Google rumored to be between $5 billion and $6 billion, according to multiple news reports citing sources close to the talks. The search-engine giant's shares advanced after Evercore Partners raised its rating on the firm to "equal-weight" from "underweight."
Merck continued to trade lower a day after the pharma giant dragged the sector down after news clinical trials of a key blood-clotting drug ran into troubles. Meanwhile, Citigroup cut the pharmaceutical company's rating to "hold" from "buy," while Bernstein cut Merck's price target to $39 a share from $42. The brokerage still has a rating of "outperform" on the stock.