Stocks turned modestly higher as investors took heart from upbeat economic news, although weak earnings pressured some sectors of the market.
Among Dow components, Merck and Home Depot rose, while Bank of America and 3M fell.
The S&P 500 and the tech-heavy Nasdaq both gained. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 16.
Among key S&P 500 sectors, utilities and healthcare gained, while tech was the only sector to fall.
In earnings news, Bank of America's earnings reported early Friday fell short of analyst expectations as mortgage-related losses took a bigger toll than anticipated. The bank earned 17 cents a share, below Wall Street estimates of 27 cents.
Bank of America's results come two days after rival JPMorgan Chase, the second largest U.S. bank, reported a drop in consumer lending and more than $1 billion in unexpected costs for servicing mortgages related to a settlement with bank regulators.
Meanwhile, the U.S. Securities and Exchange Commission is in talks to settle fraud allegations with major Wall Street Banks, including Bank of America and JPMorgan Chase, concerning mortgage securities that helped trigger the financial crisis, the Wall Street Journal reported on Friday, citing sources.
Fifth Third Bancorp , meanwhile, rose after Baird upgraded the regional bank to "outperform" from "neutral," and raised its price target slightly to $17 from $16.
Google sank, and dragged the tech sector down with it, after delivering disappointing quarterly results after the market closed on Thursday. Earnings beat expectations, but the search-engine giant's costs surged by 54 percentthanks to a record hiring process, company wide salary increases of 10 percent and increasing marketing and technology costs.
Investors are concerned Google’s new chief executive Larry Page is chasing revenue too aggressively and could take his eye off the bottom line, Reuters reported.
In the meantime, Citigroup downgraded Google to "hold" and cut the price target on the stock to $650 from $750. More than 10 brokerages also cut their prices targets for the company.