NEW YORK (CNN/Money) - Stocks finished both the session and the week higher Friday with receding oil prices providing a backdrop for the day's action.

The Nasdaq composite (up 18.13 to 1,838.02, Charts) led the way, gaining 1 percent on Friday to close the week 4.6 percent higher.

The Dow Jones industrial average (up 69.32 to 10,110.14, Charts) added on 0.7 percent, closing the week 2.9 percent higher. Standard & Poor's 500 index (up 7.12 to 1,098.35, Charts) ended the session 0.7 percent higher. For the week, the index was ahead 3.15 percent.

Oil prices softened Friday on speculation that Shiites loyal to cleric Muqtada al-Sadr surrendered a besieged mosque in Najaf. CNN reported that Iraqi police dispute claims issued by an Iraqi Interior Ministry spokesman that the police have taken control of the Imam Ali Mosque.

U.S. light crude for September delivery jumped as high as $49.40 a barrel before settling at $46.72 a barrel, down 92 cents from Thursday's record close. The September contract expires Friday.

Tim Heekin, head of stock trading at Thomas Weisel Partners, said investors have already factored in elevated oil prices, at least in the short term. He also noted that stock markets had closed higher earlier this week -- before hitting a speed bump Thursday -- despite elevated oil prices.

"I think that, overall, people are mildly optimistic about the short term for the [stock] market," he said. "People feel a decent low has been put in on Thursday."

Joseph Stevens' Director of Research at Donald Selkin credited the session's gains to solid fundamentals and the near-close of a decent second-quarter earnings season, not falling oil prices.

"This thing with the oil is nutty. Even the president of OPEC says prices should be $10 to $15 lower than they are," Selkin stated. "It has very little relation to the supply and demand statistics."

"This is just speculation," he concluded.

Lehman Brothers, betting that oil prices will remain firm, upped its rating on a handful of oil service and drilling firms.

Among the stocks affected by the ratings change: Smith International (SII: up $2.37 to $55.87, Research, Estimates), Tidewater (TDW: up $1.04 to $28.95, Research, Estimates), Oceaneering International (OII: up $1.18 to $31.78, Research, Estimates), and Cooper Cameron (CAM: up $1.22 to $49.23, Research, Estimates).

The Philadelphia Oil Services index (OSX: up $2.66 to $107.08, Research, Estimates) rose by more than 2.5 percent on back of the upgrade.

ChevronTexaco (CVX: up $1.08 to $94.18, Research, Estimates) climbed 1 percent despite reports that a jury ordered the oil company to pay $40.3 million for environmental damage stemming from a 1955 pipeline leak.

Paul Mendelsohn, chief investment strategist at Windham Financial Services, said the tech-heavy Nasdaq received some support from software and Internet stocks, as well as from some of its smaller players. He added that investors have been bargain-hunting for techs that were heavily hit over the past few weeks, with some of the leaders being the ones that were most beaten up.

Nvidia (NVDA: up $0.69 to $12.35, Research, Estimates), which jumped almost 6 percent, and Qualcomm (QCOM: up $1.69 to $37.20, Research, Estimates), which rose 4.8 percent, were among the stocks cited by Mendelsohn.

Internet search engine Google (GOOG: up $7.98 to $108.31, Research, Estimates) sailed nearly 8 percent higher one day after the stock shot up 18 percent during its hotly anticipated IPO.

Design software maker Autodesk (ADSK: up $4.70 to $42.06, Research, Estimates), meanwhile, surged 12.6 percent after posting a higher second-quarter profit and lifting its full-year outlook above consensus estimates following Thursday's closing bell.

Marvell Technology (MRVL: up $2.26 to $23.98, Research, Estimates) late Thursday posted second-quarter earnings figures that beat analysts' expectations, lifting its stock more than 10 percent Friday.

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Nordstrom (JWN: down $3.74 to $36.82, Research, Estimates) slumped more than 9 percent a day after the upscale retailer missed analysts' second-quarter earnings expectations. A ratings downgrade from AG Edwards also weighed on the stock.

Gap (GPS: up $0.47 to $20.62, Research, Estimates) received a ratings downgrade from Jefferies & Co., even as the specialty retailer met analysts' lowered second-quarter expectations Thursday. Its shares traded 2.3 percent higher.

Market breadth was positive, volume robust. On the New York Stock Exchange, advancers beat decliners by 24 to 8 as roughly 1.2 billion shares changed hands. On the Nasdaq, volume stood at 1.35 billion shares, and winners trumped losers by nearly 22 to 9.

Treasury prices eased, bringing the 10-year note yield to 4.23 percent.

In currency trading, the dollar gained ground versus the euro but weakened against the yen.

COMEX gold settled $6.20 higher to $415.50 an ounce.

Asian markets finished the week little changed, although Japanese stocks suffered a slight setback on Friday, while European markets ended lower.