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Stocks End Higher, but Down Over 1% for Week

Stocks finished higher Friday in a highly volatile week, with the Dow logging its first two-day rally since early July. Despite the wild market swings in the last several days, all three major averages are down less than 2 percent for the week.

The Dow Jones Industrial Average rallied 125.71 points, or 1.13 percent, to finish at 11,269.02—logging its first two-day rally since Jul. 6-7.

The blue-chip index had alternated between sharp gains and losses in the last seven sessions and the point swings experienced this week is similar to the week of Lehman’s bankruptcy in 2008.

The S&P 500 gained 6.17 points, or 0.53 percent, to end at 1,178.81. The Nasdaq rose 15.30 points, or 0.61 percent, to close at 2,507.98.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed near 36.

For the week, the Dow slid 1.53 percent, the S&P shed 1.72 percent, while the Nasdaq declined 0.96 percent. Cisco was the biggest gainer on the blue-chip index for the week, while BofA plunged.

Techs were the biggest sector laggards this week, while materials gained.

"Obviously the volatility will calm down over the next couple of weeks," said Brad Sorensen, director of market and sector research at Charles Schwab. "We've gotten past a lot of the uncertainty but there's still the European situation that's hanging out there. It's kind of stabilized right now, but whether it blows up again over the weekend is yet to be seen."

European shares closed higher, led by the banking sector, following the short-selling ban on financial shares by France, Italy, Spain and Belgium. (Read More: Why Banning Short-Selling 'Doesn't Do Any Good')

Meanwhile, French President Nicolas Sarkozy and German Chancellor Angela Merkel are scheduled to meet next weekto discuss issues in the the euro zone and as investors snapped up beaten-down sectors.

“Europe’s still what’s controlling this market and I’m deeply concerned,” said Todd Schoenberger, managing director at LandColt Trading. “The threat we had with France losing its AAA credit and the SocGen rumor—these are all rumors, but they have a tendency to solidify as we get closer to the weekend…I would not be shocked to see a selloff this afternoon.”

The banking sector slipped into the red, led by JPMorgan , Goldman Sachs and Morgan Stanley .

Bank of America chief executive Brian Moynihan met privately this week with Treasury Secretary Timothy Geithner and Federal Reserve governor Daniel Tarullo to calm investors and employees about the bank's share price fall, according to a Wall Street Journal report. BofA shares have been extremely volatile in the last several sessions and is still down about 10 percent for the week.

On the tech front, Hewlett-Packard gained after Jefferies raised its rating on the tech giant to "buy" from "hold."

Among earnings, Nvidia fell even after the chipmaker beat revenue expectations. In addition, Evercore cut its price target on the firm to $11 from $12. The bullish outlook follows similar comments from tech bellwether Cisco earlier this week.

Meanwhile, ExxonMobil is on pace to end the week as the most valuable U.S. companyafter being surpassed by Apple earlier this week.

Among other earnings, JCPenney slipped after the retailer posted a flat quarterly profitas sales were hampered by its by its exit from the catalog business.

Nordstrom gained after the upscale retailer raised its full-year profit and beat earnings.

A U.S. appeals court ruled that President Obama's health care law requiring Americans to buy health care insurance or face a penalty was unconstitutional.

Health care stocks were largely unchanged, however, with UnitedHealth , Aetna and WellPoint trading mixed.

Gold prices dipped for a second day, sliding from session highs earlier this week, on improved appetite for risk.

On the economic front, consumer sentiment plunged to its lowest level in more than three decades, according to the Thomson Reuters/University of Michigan survey as investors were spooked by high unemployment, low wages and the debt ceiling debate.

Meanwhile, retail sales rose in July, their biggest gain since March, according to the Commerce Department.

And business inventories posted a smaller-than-expected gainin June, according to the Commerce Department.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC—

Coming Up Next Week:

MONDAY: Empire state mfg survey, housing market index, Fed's Lockhart speaks, credit card default rates reported; Earnings from Lowe's
TUESDAY: Housing starts, import/export prices, industrial production, Sarkozy & Merkel meet; Earnings from Home Depot, Wal-Mart, Saks, TJX and Dell
WEDNESDAY: Weekly mortgage apps, PPI, oil inventories; Earnings from Deere and Target
THURSDAY: CPI, jobless claims, existing home sales, Philadelphia Fed survey, leading indicators, money supply, Forest Labs shareholder mtg; Earnings from Sears, Hewlett-Packard and Gap
FRIDAY: Fed's Pianalto speaks, Google IPO anniversary

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