Stocks closed out a volatile week with sharp gains Friday, with the Dow crossing above 13,000 for the first time since May, amid optimism that the Federal Reserve and the ECB may provide further stimulus to prop up the global economy.
Stocks spiked in midday trading following reports that the Bundesbank President and ECB chief may be in discussions on new measures to ease the euro zone's continuing debt crisis.
The Dow Jones Industrial Average soared up 253.09 points this week, or 1.97 percent, to close at 13,075.66, crossing the psychologically-important 13,000 level for the first time since early May, led by Merck .
The S&P 500 rallied 23.31 points this week, or 1.71 percent, to finish at 1,385.97. The Nasdaq jumped 32.79 points this week, or 1.12 percent, to end at 2,958.09.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed below 17.
All 10 S&P sectors ended in positive territory, led by health care and industrials.
Stocks spiked near session highs following a report from Bloomberg that the President of the Deutsche BundesbankJens Weidmann is in talks with ECB President Mario Draghi. Draghi's proposal may include rate cuts, bond purchases and new LTRO, according to the report. On Thursday, Draghi vowed to do “whatever it takes” to save the euro, which helped spark a global rally Thursday.
An ECB spokesperson wouldn't confirm nor deny the report but told CNBC that it was "normal" for Draghi to talk to other European central bank chiefs before they meet as members of the ECB governing council.
And earlier, German Chancellor Angela Merkel and French President Francois Hollande pledged to do all in their power to protect the euroafter discussing the latest events in the debt crisis by telephone. European shares finished higherand the euro rallied to a session highagainst the dollar on the heels of the announcement. (Read More: Did Draghi Just Give Investors an Exit Point?)
“It would help if Merkel and Hollande tied themselves to the mast of the euro, just like Draghi did," said Peter Fisher of BlackRock.