NEW YORK (CNN/Money) - Upbeat economic data sent U.S. stocks higher Friday, with the Nasdaq composite index ending a tough week on an up note, after manufacturing and consumer confidence figures showed surprising strength.

The Dow Jones industrial average also rose, finishing higher for a fifth straight week. But software maker Oracle cut profit forecasts, joining a growing list of technology-company warnings that helped send the Nasdaq down 3.2 percent on the week.

On Friday, the Nasdaq gained 14.16 points, or 0.8 percent, to 1,868.30, snapping a four-day losing streak and narrowing its year-to-date loss to 4.2 percent. The Dow rose 90.09, or 0.9 percent, to 10,607.23, widening its 2002 gain to 5.8 percent. Up 1.7 percent on the year, the Standard & Poor's 500 added 13.12, or 1 percent, to 1,166.16.

The University of Michigan's consumer confidence index rose to its highest level in more than a year in early March, while a government report showed that February industrial production grew twice as fast as economists expected. A separate report signaled that wholesale inflation remained tame last month.

"We are now in stage two of the recovery," said Patrizio Merciai, chief strategist Lombard Odier Group, which has about $60 billion under management. He called the industrial data most significant, saying, "The second phase of the recovery very much hinges on the ability of industrial output to improve."

The Dow rose 0.3 percent on the week while the S&P 500 advanced 0.2 percent. But the gains were tempered by several big losers.

Oracle, Nasdaq's most actively traded stock, warned that current-quarter profit will fall short of its prior expectations. And Merck, the Dow's biggest loser, announced it is pulling an application for a pain and arthritis drug to perform additional research and that first-quarter profit might miss estimates.

More stocks rose than fell in heavy volume tied to the quarterly expiration of options on stocks, stock indexes and stock index futures. On the New York Stock Exchange, advancing shares topped declining ones 3-to-2 as 1.4 billion shares changed hands. Nasdaq winners edged losers 5-to-4 as 1.5 billion shares traded.

In other markets, the dollar was little changed against the yen and euro. Treasury securities rebounded after tumbling Thursday.

The University of Michigan index of consumer confidence rose to 95 in early March, a period of rising stock prices, as consumers felt better about the outlook for the economy.

That followed a report showing that February industrial production gained 0.4 percent, topping forecasts of a 0.2 percent rise, while capacity utilization for the month also was a stronger-than-expected 74.8 percent.

Finally, the government's Producer Price Index rose 0.2 percent in February, matching forecasts, as wholesalers facing slack demand were unable to significantly raise prices. Excluding food and energy, prices were flat.

The latest economic data came four days before Federal Reserve policy makers meet to set interest rates. After cutting rates 11 times last year, policy makers are expected to hold steady on borrowing costs Tuesday before hiking them later this year

"The Fed will start to tighten by May or June," Lombard Odier's Merciai predicted.

The Dow's biggest gainers included Procter & Gamble (PG: up $2.08 to $87.07, Research, Estimates), American Express (AXP: up $1.54 to $42.15, Research, Estimates) and Wal-Mart (WMT: up $1.48 to $63.75, Research, Estimates).

Those gains offset losses in Merck (MRK: down $3.69 to $59.75, Research, Estimates), which said it was pulling its application for its pain and arthritis drug Arcoxia and that first-quarter profit could fall short. Only six of the 30 Dow stocks fell.

Nasdaq's most active stock, Oracle (ORCL: down $0.84 to $12.60, Research, Estimates), earned 9 cents a share in its fiscal third quarter, matching forecasts, as sales fell 17 percent. Looking ahead, Oracle said fourth-quarter results will fall short of its prior expectations, a sign that business technology spending has yet to rebound.

Like Oracle, Lucent Technologies (LU: up $0.06 to $4.89, Research, Estimates) and Nokia (NOK: up $0.15 to $22.11, Research, Estimates) this week joined a growing list of technology companies cutting forecasts.

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But not all outlooks were downbeat. Graphics software maker Adobe Systems (ADBE: up $2.59 to $39.18, Research, Estimates) topped estimates with its fiscal first-quarter profit and said second-quarter earnings will meet forecasts.

With a month to go until personal income tax returns are due, H&R Block (HRB: down $1.73 to $45.31, Research, Estimates) reported it took in $1.2 billion in fees from tax preparation and related services over the past two months, up 12 percent from a year earlier.

Robin Griffiths, technical analyst at HSBC Securities, expects the major indexes to stay little changed in the weeks ahead until stock prices, which have gained in recent weeks, move back in line with profits, which have yet to rebound.

"Valuation is expensive," Griffiths told CNNfn's Before Hours.

Corporate profits are expected to decline for a fifth straight quarter this month before rebounding later this year. But the price-to-earnings ratio of the S&P 500 is not much below where it was two years ago, when the index peaked above 1,527.