Stocks capped a rocky week with a rally Friday as investors breathed a collective sigh of relief after Fed Chairman Bernanke said the Fed was willing to do what it takes to stabilize the recovery.
The Dow Jones Industrial Average gained 164.84, or 1.7 percent, to close at 10,150.65.
Most of the 30 Dow components were higher, led by DuPont , Alcoa and Caterpillar .
DuPont is also the best performer on the Dow year to date, up 22 percent since the start of the year, as investors have started to place their bets on cyclical stocks. Alcoa, coincidentally, is the Dow's worst performer of the year, down nearly 36 percent.
The lone decliner in today's session was Hewlett-Packard after the company raised its bid for 3Par to $30 a share, trumping the latest offer from Dell . 3Par shares soared 25 percent.
But stocks were down for much of the week, with the Dow on Thursday logging its first finish below 10,000 since early July. Despite Friday's gains, which helped the Dow regain its footing above 10,000, the blue-chip index finished the week off about 0.6 percent.
The S&P 500 and the Nasdaq also gained Friday but finished down for the week. It was the third straight down week for all three major indexes.
It was a pretty eventful week, with existing home sales falling to 15-year lows and the Dow breaching that 10,000 mark, but a better-than-expected reading on GDP and encouraging remarks from Bernanke helped settle the market down by week's end.
Techs and industrials were the week's worst performers, while utilities and telecoms were the best.
The CBOE volatility index, widely considered the best gauge of fear in the market, fell more than 10 percent today, to around 24.50.
Fed Chairman Ben Bernanke said the Fed is ready to do what it has to help strengthen the recovery in remarks at the Fed's annual symposium on the economy in Jackson Hole, Wyoming.
Bernanke's comments helped assuage market fears over the recovery.
"The measured approach he's taking is a healthy one," said Mike O'Rourke, chief market strategist at BTIG in New York. "It's not the type that's going to supercharge the markets and help equity returns in the near term. But it will help build the foundation for the future and a steady recovery going forward."
Earlier, St. Louis Fed President James Bullard told CNBC that he doesn't see a double dip— he thinks growth will steady towards the end of the year and get back to normal in 2011.
But other market pros said today's gains were largely a product of stocks hitting key technical levels — and short covering on bets against the market.
Intel shares rebounded following an initial drop after the tech bellwether warned that third-quarter earnings would likely fall short of expectationsamid weak PC demand in "mature markets." At least two brokerages cut their price targets on Intel stock — one to $20 and the other to $25.
This weekend, Intel is expected to announce a deal with German chipmaker Infineon .
Boeing shares eked out a nice gain after an earlier bobble as the aerospace giant once again delayed delivery of its first 787 Dreamliner. This time, they cited a delay in the availability of a Rolls-Royce engine needed for the final phase of flight testing. But shares of the aerospace giant were higher.
The morning got off to a rough start after a mixed bag of economic news.
The University of Michigan and Reuters reported their gauge of consumer sentiment rose to 68.9in a final August reading from 67.8 in July but still came as a disappointment as economists had expected the gauge to rise to 69.6.
Meanwhile, second-quarter gross domestic product rose at a 1.6 percent rate, a downward revision from the previously reported 2.4 percent but ahead of the 1.3 percent economists had expected.
Another recall from Toyota: The auto maker said it will recall 1.3 million Corolla and Matrix cars in the U.S. and Canada due to a defect with engine controls that causes the cars to stall.
In addition, Ford Motor is recalling about 575,000 Windstar vansin 21 cold-weather U.S. states and Canada because of the possibility that the rear axle may fracture due to corrosion, according to federal regulators. But shares of the auto maker were higher.
Tiffany shares fell despite a solid earnings report from the high-end jeweler and an upbeat outlook. Brokerage Jefferies cut its price target on the luxury retailer to $55 from $61.
J.Crew shares tumbled after the clothing retailer posted earnings outlooks for the third quarter and full year that were below expectations.
Novell shares rose slightly even after the tech firm reported a nearly 6 percent drop in profit. S&P Equity lowered its rating on the firm to "sell" from "hold."
Investor Carl Icahn increased his stake in Motorola to 10.4 percent.
Oil rose slightly this week, settling at $75.17 a barrel. Gold settled at $1,237.90 an ounce.
Volume was decent for a late summer Friday, with just over 1 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 13 to 2.
Next week is action packed, with reports on consumer spending, auto sales, retail sales and the main event — the August jobs report on Friday.
Plus, the president will speak, several Fed officials will speak and the Fed will release the minutes from its last meeting.
On Tap For Next Week:
MONDAY: Personal spending & income; Fed's Bullard speaks; Warren Buffett's 80th birthday
TUESDAY: S&P/Case-Shiller home price index; consumer confidence index, FOMC minutes
WEDNESDAY: August auto sales; weekly mortgage applications; Challenger job-cut report; ADP employment report; ISM mfg index; construction spending; weekly oil inventories; Fed's Fisher speaks; Apple event
THURSDAY: August chain store sales; weekly jobless claims; productivity and costs; factory orders; pending home sales
FRIDAY: August jobs report; Fed's Lockhart speaks; ISM services index
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