Stocks rallied to a one-month high Friday, led by industrials, as the latest batch of earnings reports gave another shot of confidence to recovery hopes.
There was also some relief after the results from the EU bank stress tests came out.
The Dow Jones Industrial Average gained 102.32, or 1 percent, to close at 10,424.62, led by Verizon, General Electric and American Express.
For the week, the Dow finished up over 300 points, or 3.2 percent. Boeing had the most positive impact on the Dow this week, up 10 percent, while Johnson & Johnson was the weakest link, down over 3 percent.
The S&P 500 gained 3.6 percent and the Nasdaq advanced 4.2 percent for the week. The CBOE volatility index, widely considered the best gauge of fear in the market, lost more than 10 percent, closing out the week below 24.
Seven out of the 91 European banks failed the test, including HRE in Germany, as well as a Greece's Atebank and Spain's Banca Civica. Fewer banks failed than expected but there was some question about the methodology — that it went too easy on sovereign debt.
US-traded shares of European banks such as Barclay's, UBS, BNPParibas and Deutsche Bank were mixed, but Royal Bank of Scotland and Bank of Ireland jumped about 4 percent following the news.
Rochdale Securities analyst Dick Bove said stress tests don't work and the results of the stress tests are a net negative for Europe.
“You’re forcing banks to reduce their loans in order to meet this tier 1 capital guidelines, and in the process, you’re slowing down the economy," Bove told CNBC. “What the stress tests did was it lowered lending, reduced the growth in the economy and caused money supply to shrink.”
The euro finished slightly higher after see-sawing following the stress-test results.
Gold finished the week fairly flat at $1,187.80 an ounce. Oil dropped more than 3 percent this week, settling at $78.98 an ounce.
Verizon was the biggest gainer on the Dow, up 3.8 percent, after the telecom-services provider beat earnings expectations and said it was optimistic about its full-year results. But revenue fell as the firm continued to feel pinch of AT&T's exclusive contract with Apple for the iPhone.
Apple said the white version of the iPhone 4 will not be available until later this year. The company had originally said the white model would be available in late July.
Shares of General Electric rose 3.3 percent after the parent company of CNBC said its board approved a 20 percent dividend increaseand it extended its stock-repurchase plan.
GE's move also helped improve investor optimism and fueled the afternoon rally, with the Dow crossing the key 10,400 mark and the S&P finishing out the week above 1,100.
American Express rounded out the Dow's top three after two brokerages raised their ratings on the stock and one raised its price target, citing valuation.
McDonald's was at the bottom of the Dow pack today, down more than 2 percent, after the fast-food giant posted a profit that narrowly beat analyst estimates but the stock still fell as the numbers fell short of the inflated whisper numbers circulating around the Street.