Stocks broke three consecutive sessions of losses to climb higher, led by financial and tech stocks, and as oil prices stabilized at lower levels.
But the major indices were on pace to end the week with their worst weekly percentage decline since August, ending a streak of gains that had last three weeks. Stocks still werein positive territory for the month and year.
The Dow Jones Industrial Average rose more than 55 points, after finishing slightly lower in the previous session.
Intel and Boeing led Dow components higher, while Wal-Mart and Exxon Mobil fell.
The S&P 500 rose nearly 1 percent, while the the tech-heavy Nasdaq advanced nearly 1.5 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market, sank almost 10 percent to nearly 19.
All key S&P 500 sectors were higher, led by technology, materials and financials.
Oil prices stabilizing, with U.S. light crude rise slightly above $97 a barrel, after assurances from Saudi Arabia that it can pump more oil to cover for a fall in Libyan exports caused by the turmoil in the country. (Read More: Oil Could Hit $120 a Barrel: Boone Pickens)
Meanwhile, gold rose near $1,410 an ounceand was on pace for a fourth straight week of gains.
"I'm a bit surprised, but happy to see the market regain a significant chunk of the ground it lost earlier this week," said Michael Sheldon, chief market strategist at RDM Financial.
"There was every opportunity for the market to fall apart yesterday," Sheldon added, noting that the S&P 500 had bounced off the 50-day moving average of 1,289, and the DJ Transportation Index fell below 5,000. On Friday, the S&P 500 traded as high as 1,320, and the DJ Transportation Index is at about 5,056.
"It's too soon to sound the all clear yet," Sheldon says. "It's too soon to say the volatility in the Middle East is behind us."
Stocks may lose support later this session as investors ensure they aren't exposed over the weekend should conflicts in the Middle East flare up or expand, said Sal Arnuk, co-head of trading at Themis Trading.
"I can tell you generally in the market you are seeing more institutions lighten up on strength rather than buying strength," Arnuk said.
The firmer tone to stocks means, however, that the market isn't getting the 5-to-10-percent correction it's seeking just yet, according to Linda Duessel, equity strategist at Federated Investors. Still, Duessel says unrest in the Middle East, and it affect on oil prices, is unlikely to go away soon and could still prove to be a catalyst.
"We don’t expect the news will go away over there," said Duessel. "The only thing that could trump that in the near term, would be if the employment numbers (February non-farm payroll report, due next Friday) are really good. We think they will be better, but not good enough yet."
Still, Federated Investors believes the correction—when it comes—won't last the year, and that the S&P 500 will end the year at 1,450.
Tech stocks led the market higher following a handful of robust earnings from Salesforce and Autodesk.
Salesforce reported stronger-than-expected revenue growth and at least five brokerages raised their price targets for the maker of cloud computing applications. Meanwhile, Autodesk reported a profit which soared 23 percent on double-digit revenue gains throughout the computer software design company's businesses.
Several personal computer stocks also skyrocketed: Intel , Micron and AMD all gained, while the Philadelphia Semiconductor index rose nearly 2 percent.
Among financials, also big gainers for the day, Wells Fargo climbed after Goldman raised its rating on the stock to "buy" from "neutral," saying the bank could announce both a rise in its dividend and a stock buyback, while the brokerage cut Citigroup to "neutral," saying it doesn't see a near-term catalyst for the stock.
But AIG sank after investors raised concernsabout the insurer's property insurance and aircraft leasing businesses. AIG reported a profit of more than $11 billion in the fourth quarter, on asset sales, after the bell Thursday.
Elsewhere, Boeing led the Dow higher after the Pe
Energy stocks including Transocean , Schlumberger and Halliburton rebounded from the previous session's losses.
ntagon announced that the aircraft maker won a contract to build new refueling planes for the U.S. Air Force.
First Solar , however, plunged to the bottom of the S&P 500 index after the solar panel maker forecast weaker sales this year and said it would cut prices to compensate for the end of solar subsidies in Europe. Still, at least six brokerages raised their price targets for the stock.
Among retail stocks, JC Penney also slumped after the department store retailer as investors worried about the company's ability to whether higher prices for fuel and clothing. Shares of Gap weakened despite a boost in earnings and news it would increase its dividend and stock buyback program as investors focused on the retailer's weak earnings outlook. Susquehanna cut Gap to neutral from positive.
Freddie Mac, the government controlled mortgage company, posted a loss of $1.7 billion in the fourth quarterof last year and asked for $500 million in government aid, more than $100 million it sought in the third quarter.