U.S. stocks rallied on Friday, softening a fourth week of losses, as investors bet on further stimulus from central banks and corporations including General Electric and Morgan Stanley reported profits that topped expectations.
"The earnings season is coming along beautifully. No one is talking down the next quarter or next year based on currency, particularly the big multinationals doing business overseas. Their visibility is still okay," said Phil Orlando, chief market strategist at Federated Investors, referring to concerns that the strength of the U.S. dollar might increase the price and reduce the appeal of U.S. goods and services sold outside the U.S.
The CBOE Volatility Index, a measure of investor uncertainty, dropped almost 13 percent to 21.99, a level that has it up nearly 74 percent from a month ago.
"That spike in volatility was an engraved invitation to put more money into stocks," Orlando said.
The Commerce Department on Friday reported new-home construction climbed 6.3 percent in August, signaling improvement in the U.S. residential real-estate market.
The preliminary read for consumer sentiment in October came in at 86.4 versus a 84.0 estimate.
In prepared remarks delivered Friday, Fed Chair Janet Yellen voiced concern about income inequality in the United States, saying by some accounts, it is near its highest level in the past 100 years.
On Thursday, St. Louis Federal Reserve Bank President James Bullard said the central bank should think about postponing the end of its bond purchases.
"Bullard's comments stabilized the market with this thought from the Fed: 'we've got your back.' I don't know that the Fed will skip the taper in two weeks, but they might push out the commencement of Fed fund rate increases. When Yellen keeps telling us she's data dependent, I think she means it," said Orlando.