Stocks rallied in the final hour of trading to close at their highest levels Friday, with all three major indexes logging a 10-week high, amid optimism the euro zone would find a solution to its debt crisis.
The Dow Jones Industrial Average rallied 166.36 points, or 1.45 percent, to finish at 11,644.49, finishing firmly in positive territory for the year.
The S&P 500 jumped 20.92 points, or 1.74 percent, to close at 1,224.58, its best week since Jul. 2009. The Nasdaq jumped 47.61 points, or 1.82 percent, to end at 2,667.85, also higher for 2011.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished below 29, closing lower for the ninth session.
For the week, the Dow surged 4.88 percent, the S&P climbed 5.98 percent and the Nasdaq surged 7.60 percent. All 30 Dow components finished higher for the week, led by Caterpillar and Disney .
All 10 S&P sectors finished in the black for the week, led by energy. The least positive sector was utilities.
“It’s been up week so there’s been some optimism built in,” said Brian Battle, director and vice president of trading at Performance Trust Capital Partners. “There also doesn’t seem to be any weekend fear, which is why we’re not seeing a big selloff ahead of Friday’s close…There’s already been a bunch of downgrades in the euro zone and banks.”
Treasury Secretary Timothy Geithner said the IMF already has a good supply of uncommitted resources that can be used to help in the battle to stem Europe's debt crisis.
"They have very substantial resources that are uncommitted," Geithner said in a CNBC television interview.
Meanwhile, Standard and Poor's cut Spain's credit rating, citing the challenges facing Europe's finance ministers as they prepare to meet counterparts from the Group of 20nations over the euro zone debt crisis. But the market seemed to shrug off the credit rating agency's latest move.
Google rallied after the search-engine giant posted earnings and revenue that blew past expectations fueled by record spending in online advertising. At least four brokerages raised their price target on the firm.
Apple gained as the iPhone 4S became available in stores.
IBM hit an all-time high after Collins Stewart raised its price target on the tech giant to $210 from $200 and Mcacquaire started coverage on the firm with an "outperform" rating and a price target of $210.
Also on the earnings front, Mattel posted sales that topped estimates, but the toy company's profit only came in line with expectations, due to higher costs of making and packaging toys.
Ubiquity Networks soared more than 15 percent in their market debut after the wireless equipment maker broke a two-month lull in the IPO market.
On the economic front, U.S. retail sales jumped 1.1 percent in September, rebounding at their fastest pace in seven months, according to the Commerce Department. Economists had expected a gain of 0.7 percent, according to a Reuters poll. Sales growth during August was revised up to 0.3 percent.
Retailers were trading higher across the board, including Macy's , Amazon.com and Lowe's .
Meanwhile, consumer sentiment unexpectedly dipped in early October, falling to 57.5 from 59.4 in the final September report, according to the Thomson Reuters/University of Michigan survey. Economists expected the reading to rise to 60.2.
And U.S. import prices unexpectedly gained 0.3 percent in September, logging their largest increase in five months amid higher fuel and food costs, according to the Labor Department. Economists polled by Reuters had expected prices to decline 0.3 percent last month.
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Coming Up Next Week:
MONDAY: Empire state mfg survey, industrial production, Fed's Lacker and Evans speak; Earnings from Citigroup, Wells Fargo, Halliburton, Hasbro and IBM
TUESDAY: PPI, treasury international capital, housing market index, Bernanke speaks; Earnings from BofA, Coca-Cola, Goldman Sachs, J&J, Apple, Intel, CSX and Yahoo
WEDNESDAY: Weekly mortgage apps, CPI, housing starts, Fed's Rosengren speaks, oil inventories, Fed's Beige Book; Earnings from Morgan Stanley, Travelers, United Tech, AmEx, Ebay, Western Digital
THURSDAY: Jobless claims, existing home sales, Philadelphia Fed survey, leading indicators, Fed's Bullard and Kocherlakota speak, NewsCorp investor day; Earnings from AT&T, Eli Lilly, Nokia, AutoNation, Microsoft, Capital One, Chipotle and SanDisk
FRIDAY: Fed's Kocherlakota speaks, 2011 Dodd-Frank Rulemaking Deadline; Earnings from GE, McDonald's, Verizon, Honeywell and Schlumberger
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