Stocks closed sharply higher Friday to finish their best week almost two years following a stronger-than-expected manufacturing report that helped calm some doubts over the slowing recovery.
Stocks rallied all week on thin trading volume on the heels of a handful of positive economic news and over optimism that Greece's debt crisis would see a resolution.
The Dow Jones Industrial Average rose 168.43 points, or 1.36 percent, to close at 12,582.77. All 30 stocks on the blue-chip index gained, led by Caterpillar and Alcoa .
The S&P 500 gained 19.03 points, or 1.44 percent, to end at 1,339.67. The Dow and S&P 500 logged their biggest weekly percentage gain since mid-July, 2010.
The tech-heavy Nasdaq climbed 42.51 points, or 1.53 percent, to finish at 2,816.03, marking its best weekly gain in almost two years.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled below 16.
All key S&P sectors gained for the week, led by energy and techs, both up more than 6 percent.
Volume was light ahead of the long weekend with the consolidated tape of the NYSE at 3.25 billion shares, while 865 million shares changed hands on the floor.
"I don't think this momentum's going to continue—I think we'll have to wait until earnings season," Darin Richards, CIO of AKT Wealth Advisors told CNBC. "Clearly, that double-dip recession was out there and people were nervous and that's been taken off the table with some of the manufacturing and some of the positive data."
If second-quarter earnings turn out to be stronger-than-expected, Richards said 1,450 on the S&P is "definitely a reach."
Earnings season kicks off in the second week of July with Alcoa scheduled to report on Jul. 11. They will pay close attention to corporate forecasts, given the weakness in the economy.
"If not, then 1,400 is a little more conservative, and I think you'll see a little more slow, steady as opposed to this fantastic week we've just had," he said.
On the economic front, the pace of growth in the manufacturing sector picked up for the first time in four months in June, according to the ISM report.
However, consumer sentiment worsened in Juneamid jitters about the economic outlook, according to the Thomson Reuters/University of Michigan survey. Meanwhile, construction spending declined for a sixth straight month during May to its lowest in more than a decade, according to the Commerce Department.
In company news, Apple and Research In Motion and a consortium of four other partner companies won the bidding process for bankrupt Nortel Networks' remaining patent portfolio for $4.5 billion, in a hotly contested auction that saw Google and Intel lose out.
Meanwhile, RIM agreed to study a split of its co-chair and co-chief executive roles.
Hulu has started preliminary sales talks with potential buyers, including Google, Microsoft and Yahoo, according to reports. Last year, the online video site planned to raise $200 million to $300 million in a public offering that would have valued the company at about $2 billion.
GM and Ford gained after both automakers said sales climbed more than 10 percent in June. Toyota , among others, are also expected to report throughout the day.
Oil prices slippedafter China's factory output grew at its slowest pace in 28 months and as the dollar strengthened. U.S. light, sweet crude declined 48 cents to settle at $94.94 a barrel, while London Brent crude fell 71 cents to settle at $111.77 a barrel. Meanwhile, gold tumbled more than 1 percentto a six-week low near $1,480 an ounce.
Dendreon gained after U.S. regulators said the Medicare and Medicaid federal health insurance programs will fully cover Provenge, the drugmaker's
Oshkosh jumped after billionaire investor Carl Icahn said he wants to meet with the specialty truck maker's management to discuss enhancing shareholder value.
Darden Restaurants soared after the company said it is starting a new round of cost cuts and revamping its marketing to boost results at its Olive Garden restaurants. This comes after the firm earnings that met expectations.
Meanwhile, Zynga filed paperwork for an initial public offering, saying it hopes to raise up to $1 billion.
Treasury Secretary Timothy Geithner is considering stepping down later this year, but will not make a decision until contentious negotiations over the debt ceiling are completed.
European shares hit a one-month closing highto record their best week in 10 months.
Coming Up Next Week:
MONDAY: All markets closed for Independence Day
TUESDAY: Factory orders
WEDNESDAY: Weekly mortgage applications, Challenger job-cut report, ADP employment report, ISM non-mfg index, Obama townhall on economy, NYSE shareholders vote on DB merger
THURSDAY: Jobless claims, oil inventories, chain-store sales
FRIDAY: Non-farm payroll, wholesale trade, consumer credit
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