NEW YORK (CNN/Money) - Stocks closed out a strong week little changed Friday, with the major indexes all showing weekly gains for the first time since May and the Dow industrials seeing their biggest one-week percentage gain since late September.

A strong rally that began Tuesday and lasted through Thursday largely overshadowed any losses incurred during Monday's big selloff, with the Dow industrials seeing its first four-session winning streak since late January.

The Dow gained 33.43 to close at 8,745.45; it was down as much as 146 points earlier in the session but moved closer to breakeven around midday. For the week, the average gained 5.2 percent.

The Nasdaq composite lost 10.40 to close at 1,306.12; for the week, it gained 4.7 percent. The Standard & Poor's 500 index gained 3.18 to end the day at 908.64; for the week it gained 5.1 percent.

The major indexes all closed higher on a weekly basis for the first time since the week ended May 17, according to Ned Davis Research.

"The market seems to have fresh life, fresh enthusiasm. Psychology is what this market is all about and when we feel good, we buy," Peter Mancuso, New York Stock Exchange specialist at Performance Specialist Group, told CNNfn's Street Sweep.

Gains in financials, biotech and pharmaceuticals, and consumer products stocks powered the week's rally, pushing stocks higher despite Monday's selloff on poor economic reports and broad-based selling.

Analysts attributed the rest of the week's gains to an improvement in psychology as well as hopes that the Federal Reserve will cut interest rates when it meets for its rate-setting policy meeting early next week, although most economists think that a cut is highly unlikely.

One good sign for psychology was the market's comparatively muted reaction to some of the week's scandals, including the Securities and Exchange Commission's probe of energy trader Mirant (MIR: up $0.20 to $3.24, Research, Estimates), the indictment of former ImClone (IMCL: up $0.59 to $7.34, Research, Estimates) CEO Sam Waksal and more accounting troubles at telecom WorldCom.

"The shock is gone. It's over. People are focusing on the future," Mancuso said.

Although analysts stressed that that does not mean stocks are necessarily headed up from here.

"There's not a huge rally building now, but we've seen a little pattern in the past few weeks of rally, scale back, and then continue, and we may see that again," said John Hughes, market analyst at Shields & Co.

Next week brings a highly anticipated Federal Reserve decision on interest rates, as well as reports on consumer prices, retail sales and consumer sentiment.

Although the period of reporting quarterly results is nearly over, a few influential companies, including Applied Materials (AMAT: down $0.49 to $13.86, Research, Estimates), Wal-Mart Stores (WMT: up $0.01 to $49.20, Research, Estimates) and Dell Computer (DELL: up $0.01 to $25.60, Research, Estimates) are all expected to release results in the coming week.

Hopes for a rate cut were intensified Thursday, some analysts said, after news of the International Monetary Fund's larger-than-expected $30 billion bailout package for Brazil. The package hopefully cuts the odds of Brazil experiencing an economic collapse similar to the one that plagued Argentina earlier in the year, but also seemed to intensify concerns regarding how much economic conditions and financial markets have deteriorated of late.

The move propelled financials, such as Dow companies J.P. Morgan Chase (JPM: down $0.03 to $26.35, Research, Estimates) and Citigroup (C: up $0.41 to $34.31, Research, Estimates), both of whom are heavily invested in Brazilian companies.

In corporate news Friday, data storage equipment maker Emulex (ELX: down $8.34 to $15.27, Research, Estimates) warned that its fiscal first-quarter and fiscal-year sales will come in lower than expected. The news knocked sector mates QLogic (QLGC: down $3.42 to $35.90, Research, Estimates) and Brocade Communications (BRCD: down $1.92 to $15.36, Research, Estimates) sharply lower.

But shares of electronics chain retailer Best Buy (BBY: up $1.71 to $21.26, Research, Estimates) bounced higher Friday, boosting the New York Stock Exchange, after hitting a new 52-week low Thursday after it cut its profit outlook.

Shares of Concord EFS (CEFT: down $0.47 to $16.40, Research, Estimates) were unusually active Friday, slumping more than 10 percent following Thursday's decline on rumors of a Securities and Exchange Commission probe. The electronic payment service provider announced Friday that it will liquidate investments in two hedge funds in response to investor concerns, but the news had little impact on the stock selling.

Although it no longer trades, troubled telecom WorldCom still has an impact on investor confidence, as a reminder of the corporate scandals that have plagued markets for months. In the latest revelation: the bankrupt long-distance phone service provider found another $3.3 billion in accounting irregularities, bringing the total to $7.1 billion.

"I think the market is performing fine. We're due for a little rest and that's what you're seeing. We've had some nice days, but the volume is light, the dollar is a little weaker, and traders don't want to hold their positions ahead of the weekend," said Peter Green, a market analyst at MKM Partners.

Another key factor in market activity Friday and throughout the week has been speculation about whether the Federal Reserve will cut interest rates when it meets next week. After cutting rates 11 times in 2001, the overnight bank lending rate currently stands at 1.75 percent.

The Wall Street Journal and Washington Post both ran pieces Friday saying the Fed is unlikely to cut rates. The story in the Post was by respected Fed watcher John Berry; however, he claimed no inside sources.

While most firms that deal directly with the Fed expect rates to hold steady, two Morgan Stanley economists issued a note Friday saying they expect the Fed to cut by one-half percentage point, bringing the overnight bank lending rate down to 1.25 percent. The firm cited the sharp stock deterioration of the last two months and the impact of corporate governance concerns.

In the day's economic news, the Labor Department said that U.S. productivity, which measures worker output per hour, rose at a 1.1 percent annual rate in the second quarter after growing at a revised 8.6 percent annual rate in the first. Economists surveyed by Briefing.com expected growth of 0.7 percent.

Long-term Treasury prices rose, pushing the 10-year note yield down to 4.25 percent. The dollar fell against the euro and yen. Light crude oil futures rose 19 cents to $26.86 a barrel. Gold rallied $3.80 to $316 an ounce.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers by more than 8-to-7 as 1.24 billion shares changed hands. On the Nasdaq, decliners beat advancers by more than 6-to-5 as 1.32 billion shares traded.