April auto sales showed an annual rate of 16.45 million, Autodata said. The figure was slightly below estimates but still a 4.6 percent gain from the same period last year. General Motors and Ford reported stronger-than-expected U.S. auto sales, with GM sales up nearly 6 percent and Ford posting a 5.4 percent gain from the same month last year. Fiat Chrysler and Nissan reported an increase of 5.8 and 5.7 percent, respectively. Toyota missed expectations, up 1.8 percent versus an increase of 5.9 percent.
Expansion in the U.S. manufacturing sector weakened in April as growth in output and new orders fell, according financial data firm Markit. The report said the final U.S. Manufacturing Purchasing Managers' Index fell to 54.1 in April from 55.7 in March. The preliminary read was 54.2.
On the back of disappointing first-quarter GDP data, April's manufacturing ISM index missed slightly, coming in at 51.5, unchanged from the previous month. The report was expected to show a modest rise to 52 that would follow five consecutive months of weakening.
Construction spending data for March showed a decline of 0.6 percent. The University of Michigan's consumer sentiment survey for April showed a final read of 95.9, up from 93.0 in March.
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Requiring the Federal Reserve to operate according to a monetary policy rule could generate worse economic outcomes than using a goal-based mandate like an inflation target, San Francisco Fed President John Williams said in remarks prepared for delivery at Chapman University.
Earlier, Cleveland Fed President Loretta Mester said the central bank needs a clearer understanding of how problems in housing—stemming from changes in household finance—might destabilize the U.S. economy. Mester is an alternate voting member of the Federal Reserve Open Market Committee.
Mester also said the Federal Reserve is getting close to the appropriate time to raise interest rates and all policy meetings, including June's, are "on the table for a move."
Oil remains in focus as prices continued to hold near highs. Crude pulled back slightly, settling down 0.8 percent at $59.15 a barrel after hitting an intraday record for 2015 of $59.90 a barrel.
Yum Brands jumped nearly 7 percent to highs not seen since its spinoff from PepsiCo on news that Dan Loeb's Third Point took a significant stake in the firm. The hedge fund also announced a stake in Devon Energy.
Shares of tank car makers Greenbrier, Trinity Industries, Wabtec and American Railcar jumped on news of new oil railcar standards.
Chevron, Clorox and Public Service were among the few companies reporting before market open.
Oil and natural gas producer Chevron posted a 43 percent drop in quarterly profit on Friday due to low oil prices. The company reported net income of $2.57 billion, or $1.37 per share, compared to $4.51 billion, or $2.36 per share, in the year-ago period. Production grew 4 percent to 2.68 million barrels of oil equivalent per day.
Moody's closed 0.30 percent lower after posting earnings of $1.11 per share for its latest quarter, beating estimates by 8 cents, with revenue also well above estimates. Its results were powered by strong increases in both debt rating and analytics revenue.
VF Corp closed down half a percent after the firm matched estimates with quarterly profit of 67 cents per share, with revenue very slightly below Street forecasts due to international weakness. However, the North Face and Timberland maker also increased its full-year earnings forecast.
CVS Health closed up 1.18 percent after reporting earnings of an adjusted $1.14 per share for its latest quarter, 6 cents above estimates, while revenue also beat analyst forecasts. The company's results were helped by stronger specialty pharmacy results, but it gave a current quarter view that falls below Street forecasts.
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The Dow Jones Industrial Average closed up 183.54 points, or 1.03 percent, at 18,024.06, with Apple leading blue chips higher, with Chevron the greatest of three laggards.
The S&P 500 closed up 22.78 points, or 1.09 percent, at 2,108.29, with materials leading nine sectors higher and telecommunications the only laggard.
The Nasdaq closed up 63.97 points, or 1.29 percent, at 5,005.39.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded around 13.