Stocks finished sharply higher Friday, extending their gains for a second session, amid signs of stabilization in the euro zone and after a better-than-expected consumer report.
All three major averages are now in positive territory for 2011.
The Dow Jones Industrial Average rallied 259.89 points, or 2.19 percent, to finish at 12,153.68.
The S&P 500 added 24.16 points, or 1.95 percent, to close at 1,263.85. The Nasdaq surged 53.60 points, or 2.04 percent, to end at 2,678.75.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished near 30.
For the week, the Dow gained 1.42 percent, while the S&P climbed 0.85 percent. However, the Nasdaq slipped 0.28 percent. Among Dow components, Merck was the biggest gainer for the week, while BofA was the worst performer.
Nine out of 10 S&P sectors finished in positive territory for the week, led by health care. Financials slipped.
Trading volume was the lightest in almost four months, while the U.S. bonds market was closed to honor Veteran's Day.
“The wild card continues to be Europe—part of the volatility is that the market does not understand what to do and that piece will continue—Europe is probably several steps behind where we are in the U.S.,” said Peter Coleman, director of research at JMP Securities. “Things are slowly improving for the U.S. economy, but at the rate of growth that we’re at, it wouldn’t take a big shock somewhere in the world to impact us.”
The Italian Senate passed a new budget lawthat would allow for final approval of the package in the lower house over the weekend and the formation of an emergency government.
The move could pave the way for Prime Minister Silvio Berlusconi’s resignation and the appointment of Mario Monti as his replacement.
Meanwhile, Greece’s new Prime Minister Lucas Papademos will be naming a new crisis cabinet. However, Papdemos faces an uphill battle, with opposition growing to more belt-tightening in the debt-ridden nation.