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Stocks Jump, but Snap 6-Week Winning Streak

Stocks rallied to close near session highs Friday after Bernanke reiterated that there is further room for the central bank to act and following reports the ECB is considering setting yield band targets in a new bond- buying program.

Still, all three major indexes failed to log gains for the week, with the Dow and S&P 500 snapping a six-week winning streak.

The Dow Jones Industrial Average rallied 100.51 points, or 0.77 percent, to close at 13,157.97, led by Verizon.

The S&P 500 rose 9.05 points, or 0.65 percent, to end at 1,411.13. The Nasdaq gained 16.39 points, or 0.54 percent, to finish at 3,069.79.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended near 15, surging more than 13 percent for the week.

For the week, the Dow erased, 0.88 percent, the S&P 500 lost 0.50 percent, and then Nasdaq slipped 0.22 percent. H-P led the blue-chip laggards for the week, while Kraft was the best performer.

Most key S&P sectors finished higher, led by telecoms and consumer staples, while materials ended in the red.

Trading volume has been extremely light all week due to the summer holiday season and ahead of the Fed's symposium at Jackson Hole, Wyoming, where Bernanke and ECB President Mario Draghi are expected to speak.

Shortly after a weak open, the market popped as traders reacted to a letter from Bernanke, obtained by the Wall Street Journal, who said there is "scope for further action" by the Fed to ease financial conditions and support the economy. The letter was in response to questions from Rep. Darrell Issa.

The Chairman's comments echoed remarks from the Fed's latest meeting minutes from earlier this week.

“The market is in a good mood today based on the Fed’s statements and Bernanke’s been very consistent—he’s going to do whatever it takes and he’s ready to make a move possibly as early as September,” Katie Nixon, CIO of wealth management at Northern Trust told CNBC’s “Power Lunch.”

Growing doubts over whether the Fed will introduce further stimulus measures put a damper on equitiesin the previous session. (Read More: Why Markets Should Cheer QE3 Is Not Coming Soon)

Around the same time, equities were also boosted after a report ECB is considering setting yield band targets under a new bond-buying programthat could help contain borrowing costs for Greece, Spain and other euro zone countries.

Stocks initially opened lower amid jitters over Greece's future in the euro zone. German Chancellor Angela Merkel said the debt-ridden nation must stick to its commitments to stay in the euro area and did not commit to granting more time for Greeceto complete the required reforms to receive bailout loans.

Among earnings, Autodesk plunged after the design-software maker's results missed estimates and handed in current-quarter profit and sales forecasts that disappointed analysts. At least four brokerages lowered their price targets on the firm.

Salesforce.com declined after the tech company's current-quarter earnings outlook missed expectations.

Also on the tech front, a Seoul court ruled that Samsung's Galaxy smartphone looks very similar to Apple's iPhone, but the company has not violated the iPhone design. (Read More: How Has Tim Cook Done as CEO?)

Eli Lilly rallied after the pharmaceutical company said although its experimental Alzheimer's drug failed to meet main trial goals, it slowed cognitive declinein patients with mild forms of the disease.

On the economic front, durable goods orders jumped in July, thanks to robust aircraft demand, according to the Commerce Department.

By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

On Tap Next Week:

MONDAY: Dallas Fed mtg. survey, Fed's Pianalto speaks, Fed's Evans speaks; Earnings from Tiffany
TUESDAY: S&P Case-Shiller home price index, consumer confidence, Richmond Fed mfg index, 2-yr note auction
WEDNESDAY: Weekly mortgage apps, GDP, corporate profits, pending home sales, oil inventories, 5-yr note auction, Beige Book; Earnings from Heinz, Pandora, TiVo
THURSDAY: Jobless claims, personal income & spending, 7-yr note auction, chain-store sales; Earnings from Zumiez
FRIDAY: Chicago PMI, consumer sentiment, factory orders, farm prices, Bernanke's Jackson Hole speech

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