Stocks traded off the highs of the day before the close, amid a still uncertain global environment rocked by uncertainty in the Middle East and Japan, although bank stocks got a lift as institutions began announcing dividend increases.
The Dow Jones Industrial Average rose more than 60 points, after rising more than 150 earlier in the session, and after climbing back from the lows of the yearin Thursday's session.
Among Dow components, JPMorgan , Caterpillar and American Express gained, while Travelers slipped.
The S&P 500 and the Nasdaq also rose. The CBOE Volatility Index, widely considered the best gauge of fear in the market, sank more than 6 percent to below 25. The VIX had been as high as 30 earlier in the week as the Japan nuclear crisis unfolded.
Among key S&P 500 sectors, financials,materials and industrials rose, while consumer discretionary fell.
The market continued to be volatile on Friday as investors kept abreast of the events unfolding in Libya as well as Japan, where officials were still struggling to contain a nuclear disaster.
"There's lots of back-and-forth movement as investors try to grasp the situation going on in the world right now," said Paul Brigandi, vice president of trading at Direxion Funds.
Investors stepped in on Thursday to snap up bargains created by a 5 percent downdraft in the S&P 500, but today's rally has stalled a bit because there's "still a lot of uncertainty out there," Brigandi said.
"Heading into the weekend, a lot of news could come out," he added. "You won’t see too much conviction."
That lack of conviction may have contributed to a late afternoon slide in stocks, as investors were reluctant to hold positions ahead of the weekend with so many questions remaining about Japan's situation and the Middle East, said Joe Saluzzi, co-manager of trading at Themis Trading.
"And nowadays, the way things trade, people want to be flat at the end of the day," Saluzzi said.
And "the odds of getting bad news over the weekend are higher than getting good news," said Uri Landesman, president of Platinum Partners.
Technically, Landesman said he had been waiting for stocks to fall. The loss in the S&P 500 this week, from a high of 1,344 on Feb. 18, to around 1,278 today, isn't enough.
"I still think we test 1230 on this move," Landesman said. "Then I think, barring disastrous news, (traders) will give it at least a shot at holding it there, and maybe rallying off of that."
Stocks got a boost at the beginning after the session after Libya announced it was declaring a ceasefireto protect civilians in the wake of UN Resolution reached late Thursday to create a no-fly zone over the country, although there were reports that fighting was continuing.
The market was already poised to move higher in the wake of a decision by the group of seven largest industrialized nations (G7) to intervene in the currency marketto restrain a soaring yen in the wake of last week’s devastating earthquake in Japan.