Stocks closed near their highs Friday, climbing steadily throughout the session, buoyed by a strong consumer sentiment report and as investors appeared to show relief after the euro zone's latest plan to solve its debt crisis.
All three major indexes posted an impressive gain for the second week.
The Dow Jones Industrial Average jumped 186.56 points, or 1.55 percent, to finish at 12,184.26, led by General Electric and Caterpillar .
DuPont was the only laggard on the blue-chip index.
The S&P 500 rallied 20.84 points, or 1.69 percent, to close at 1,255.19. The Nasdaq soared 50.47 points, or 1.94 percent, to end at 2646.85.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished below 27.
For the week, the Dow gained 1.55 percent, the S&P climbed 1.69 percent and the Nasdaq soared 1.94 percent. Among Dow components, GE was the biggest gainer for the week, while DuPont sagged.
Nine out of the 10 S&P sectors ended in positive territory, led by banks, while materials lagged.
“On the surface the market looks at this to be in the right direction, but if you go one step deeper, it’s not enough money, there’s still a lot of uncertainty in terms of how to implement [the deal] and there’s a fragmentation of the very foundation of the European Union,” said Matthias Kuhlmey, managing director at HighTower. “So the bottomline is that things will stay volatile for a long time and a lot of questions will remain.”
Twenty-six of the 27 EU nations agreed to pursue tighter integrationwith stricter budget discipline in the single currency area, but Britain said it could not accept proposed EU treaty amendmentsafter failing to secure concessions.
British Prime Minister David Cameron added Britain would never joined the single currency, a statement which was immediately criticized elsewhere in Brussels.
With Britain, the EU's third biggest economy, opting out of the fiscal process, questions over the cohesiveness of the wider bloc will be posed.
"As long as the disaster scenario is off the table, the markets can get back to focusing on the fundamentals—the EU summit does have an impact on that," said Aaron Gurwitz, chief investment officer with Barclays Wealth Management. "Although on a day to day basis, I don’t think the summit is having that much of an effect.”
Meanwhile, ratings agency Moody's downgraded three French banks, saying their creditworthiness was being hurt by the fragile operating environment for European financials.
On the economic front, consumer sentiment climbed to 67.7, gaining for the fourth-consecutive month, according to the Thomson Reuters/University of Michigan's preliminary reading. Economists surveyed by Reuters expected a reading of 65.5.
Meanwhile, U.S. trade deficit narrowed in October to $43.5 billion, its lowest in 10 months, according to the Commerce Department. The result was in line with Reuters estimates. However, September trade deficit was revised to $44.2 billion from $43.1 billion.
GE gained after the conglomerate boosted its quarterly dividendto 17 cents from 15 cents. GE is the minority owner of CNBC and CNBC.com.
Meanwhile, fellow Dow component DuPont fell after the chemical maker slashed its full-year profit outlook, citing slower growth in some of its business due to weakness in its end markets. Meanwhile, Citi cut its price target on the firm to "neural" and reduced its price target to $47 from $53.
Among techs, Texas Instruments slumpedafter the chipmaker
Apple appealed a U.S. judge's decision not to block Samsung Electronics from selling Galaxy smartphones and tablets in the U.S. market, according to a court filing.
Meanwhile, China's industrial output growth hit its slowest pace in more than two yearsin November and inflation tumbled as economic conditions deteriorated, raising expectations Beijing will ease monetary policy again.
—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC—
Coming Up Next Week:
MONDAY: 3-yr note auction, Treasury budget, FedEx's busiest shipping day, Google's Schmidt speaks in DC
TUESDAY: NFIB small biz optimism index, retail sales, business inventories, 10-yr note auction, FOMC mtg announcement, GE annual outlook meeting; Earnings from Best Buy
WEDNESDAY: Weekly mortgage applications, import & export prices, oil inventories, 30-yr bond auction, OPEC meeting
THURSDAY: Jobless claims, PPI, Empire state mft survey, current account, Treasury international capital, industrial production, Philadelphia Fed survey, credit card default rates reported; Earnings from Discover Financial, FedEx, Pier 1 Imports, Rite Aid, Accenture, Adobe Systems, Research In Motion
FRIDAY: CPI, quadruple witching
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