Stocks Log 4-Day Rally, Dow Soars 2% for Week

Stocks ended higher for the fourth-straight session Friday, logging sharp gains for the second week, as Wall Street cheered the Federal Reserve’s decision to embark on another round of monetary stimulus.

Stocks briefly cut their gains after ratings agency firm Egan-Jones lowered the sovereign debt rating of the United Statesto AA-minus from AA, but soon bounced back.

Major U.S. Indexes

The Dow Jones Industrial Average closed higher for a fourth-straight session, led by United Tech and Caterpillar .

The S&P 500 and the Nasdaq also ended in positive territory. The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded above 14.

For the week, the Dow soared 2.15 percent, the S&P 500 jumped 1.94 percent, and the Nasdaq rallied 1.52 percent. Bank of America led the Dow gainers for the week, while Intel sagged.

Among the key S&P sectors, energy was the best weekly performer, while utilities dragged.

And while history indicates that September is the worst month of the year, all three major averages are so far up nearly 4 percent across the board.

“The sole reason we had this rally over the course of the last couple months was in anticipation of the ECB and Fed acting,” said Scott Wren, senior equity strategist at Wells Fargo Advisors. “I’d love to see a pullback here—that would be an opportunity to get in. Retail investors are still afraid of the market and they’re not sweating that they missed something.”

Stocks rallied to multi-year highs in the previous sessionafter the Fed launched another aggressive stimulus program, saying it will buy $40 billion of mortgage debt each month and continue to purchase assets to improve the jobs market. (Read More: If I Were Bernanke, I Would Resign—Marc Faber)

European shares closed sharply higherfollowing the Fed news, but investors continued to track developments in Greece and Spain after the ECBand that they were in negotiations with Spain for a 300 billion euro bailout.

Gold and the euro jumped to a against the dollar. (Read More: Gold Set for Even Bigger Bernanke Boost)

Still, some pros were skeptical on the Fed's latest decision.

“I don’t think this is going to have a very happy ending because as we’ve seen through QE1 and QE2, it’s not going to create jobs,” said Alan Valdes, director of floor operations at DME Securities. “To a lot of traders, this is a sign that the economy’s a lot weaker than you think and we’re still on life support.”

Apple hit an all-time high near $700 a share as the tech giant started taking pre-orders for its new iPhone 5. The phones will also be available through AT&T , Sprint and Verizon . Meanwhile, Stifel Nicolaus downgraded Verizon and AT&T to "hold" from "buy," saying strong sales of the iPhone 5 could result in margin pressure.

Social media stocks Facebook , Zynga , LinkedIn and Yelp soared. Facebook logged its best one-week rally, up more than 15 percent, since its IPO in May.

United Healthcare will be replacing Kraft Foods in the Dow Jones Industrial Average. The change will be effective after the close of trading September 21. Kraft entered the Dow on September 2008, replacing AIG .

Home Depot said it will and cut 850 jobs in China as the world's largest home-improvement retailer changes its focus in the Chinese market to online and specialty stores.

On the economic front, consumer sentiment jumped in early September, , according to the Thomson Reuters/University of Michigan's index. And retail sales in August, lifted by automobiles and high gasoline prices, according to the Commerce Department.

Consumer prices index logged its biggest gain in three years, according to the Labor Department. Industrial production fell in August, logging its biggest decline since March 2009, according to the Federal Reserve.

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

On Tap Next Week:

MONDAY: Empire state mfg survey, GM temporarily halts Volt production, McDonald's new menu launch
TUESDAY: Fed's Evans speaks, current account, Treasury int'l capital, housing market index, Fed's Lacker speaks, Ford Fusion launch; Earnings from FedEx
WEDNESDAY: Weekly mortgage apps, housing starts, existing home sales, oil inventories; Earnings from AutoZone, General Mills, Adobe Systems, Bed Bath & Beyond
THURSDAY: Jobless claims, Philadelphia Fed survey, leading indicators, Fed's Kocherlakota speaks; Earnings from CarMax, ConAgra, Rite Aid, Oracle
FRIDAY: Quadruple witching, Fed's Lockhart speaks, iPhone 5 shipping date

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