The Dow Jones industrial average closed up about 120 points with Goldman Sachs and JPMorgan Chase among the top contributors to gains. The Dow ended 1 percent higher for 2016.
"Part of it's options expiration and the aftermath of the Fed — people trying to get their arms around what it means," said Marc Chaikin, CEO of Chaikin Analytics.
The S&P 500 also closed higher for the year so far and was about 4 percent below its 52-week intraday high. Health care and financials led advancers, while telecommunications was the greatest laggard. As of the close, health care, financials and consumer discretionary were the only S&P sectors negative year-to-date.
"Right now I think it's more momentum building on the upside. The breadth of the market has improved significantly," said Bruce Bittles, chief investment strategist at RW Baird.
As of morning trade, 38 S&P 500 stocks, including Verizon, hit new 52-week highs and none touched new lows.
U.S. crude oil futures for April delivery settled down 76 cents, or 1.89 percent, at $39.44 a barrel. Oil briefly topped $41 a barrel in morning trade for its highest level since Dec. 4. The U.S. oil rig count showed a rise of one rig according to Baker Hughes.
Options expiration on Friday would likely contribute to volatility, traders said.
The Nasdaq composite underperformed, briefly turning negative as Microsoft and Amazon declined. Adobe closed up 3.85 percent, after touching an all-time high in intraday trade, following guidance and quarterly earnings that topped expectations.
The Dow transports outperformed, closing 1.45 percent higher with Delta Air Lines and American Airlines leading advancers. The transports are up 7.5 percent year-to-date and gained nearly 5 percent for the week in their first nine-week win streak since May 2009.
"You've had every major central bank in the world (say) something in the last week and it's all been stock supportive," said Jeremy Klein, chief market strategist at FBN Securities. He also noted support from recent improvement in economic fundamentals.
The Federal Reserve on Wednesday lowered its projections for the number of hikes in 2016 to two from four. The drop was larger than most expected but many market participants still expect just one hike this year.
The Fed news followed the Bank of Japan's decision to keep rates unchanged earlier in the week and the European Central Bank's package of stimulus measures, including a rate cut, last week.
The U.S. dollar index recovered slightly from a recent decline to trade higher, but declined more than 1 percent for the week, its third-straight weekly decline. The euro was near $1.127 and the yen at 111.60 yen against the greenback Friday afternoon.
European stock indexes closed higher but mixed on the week. Most Asian stocks ended higher on the day and week, except for the Nikkei 225 which lost more than 1 percent Friday to end the week lower.
The iShares MSCI Emerging Markets ETF (EEM) posted its first three-week win streak since October.
The "strong dollar trade (is) being unwound in reverse. So all the areas of the market that benefit from a weaker dollar are taking off," said Adam Sarhan, CEO of Sarhan Capital.
Treasury yields held lower, with the 2-year yield at 0.84 percent and the 10-year yield at 1.88 percent.
Gold settled down $10.70 at $1,254.30 an ounce and lost nearly 0.4 percent for the week, its second-straight weekly decline.
"The only thing I'd look to confirm this (rally in stocks) is gold. ... If that continues to trade lower that would confirm this as well," said Dan Veru, chief investment officer at Palisade Capital Management.
Still, he said "a pause today wouldn't be indicative of a change in sentiment."
In a light day of economic news, the preliminary March read on consumer sentiment was 90.0, down from 91.7 in February.
The Dow Jones industrial average closed in positive territory for 2016 on Thursday, as gains in materials and industrials led stocks higher. A rise in oil prices and a positive view of the Fed also helped stocks.
Read MoreUS markets to focus on oil price rise, Fed speeches in light data day
Three voting members of the Federal Open Market Committee spoke Friday, in their first public remarks since the conclusion of the meeting on Wednesday.
St. Louis Fed President James Bullard discussed in a prepared presentation whether the extended period of low rates in the United States and Europe has, instead of boosting demand and forcing inflation higher, created a situation where inflation will remain low until rates are increased, Reuters reported. Bullard was speaking at the ECB International Research Forum on Monetary Policy.
He also said the Fed's inflation and employment goals have essentially been met and it would be "prudent" to edge interest rates higher, Reuters said.
Read More Bernanke: Monetary policy 'reaching its limits'
Separately, New York Fed President William Dudley said in a Reuters report that supervisors from the Fed and other agencies can reduce, but not eliminate, the risk of bank failures. Dudley was speaking at a New York Fed conference on "Supervising Large, Complex Financial Institutions."
Speaking at the same event, Boston Fed President Eric Rosengren said rigorous stress tests and hefty capital requirements have helped make the biggest U.S. banks more resilient than their foreign counterparts to financial market swings, Reuters reported.