NEW YORK (CNNMoney.com) - Stocks gained modestly Friday and more substantially for the week, pushing the Dow industrials and S&P 500 index to their best levels since May 2001.

The Nasdaq composite (up 6.92 to 2,306.48, Charts) added 0.3 percent.

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The Dow Jones industrial average (up 26.41 to 11,279.65, Charts) and the Standard & Poor's 500 (up 1.92 to 1,307.25, Charts) index both saw smaller gains, but nonetheless managed to stay above nearly five year highs.

All three major gauges also closed higher for the week. The Nasdaq gained nearly 2 percent, the Dow gained 1.8 percent and the S&P 500 gained 2 percent.

Stocks were mixed in the morning, as investors digested an upbeat read on factory output and a less bullish read on consumer sentiment. Rising bond yields and some discouraging corporate news out of GM, AIG and others also took a toll.

But the market drifted higher as the session wore on, with gains in homebuilders, telecom and select technology shares providing support.

Whether stocks can keep building on these recent highs in the short term is not clear, analysts said.

"I think we can keep drifting higher," said John Forelli, portfolio manager at Independence Investments.

"But to really see a bigger push, we'd need more clarification from the Federal Reserve about when the interest rate hikes are going to end, or we'd need more benign economic data to suggest an end is near," Forelli added.

Among stock movers, General Motors (down $1.09 to $21.13, Research) lost nearly 5 percent after saying late Thursday that its 2005 loss was $2 billion more than previously stated. The automaker and Dow component also said it would delay filing its annual report, and would have to restate some results going back to 2000 due to accounting errors. (Full Story).

Fellow Dow component American International Group (Research) lost 0.6 percent after reporting quarterly earnings late Thursday that fell from a year earlier and missed estimates. The insurer saw a steep drop in profit due to a $1.64 billion charge it took to settle claims of fraud and bid rigging.

However, a number of Dow industrial components were higher. The biggest gainers were Boeing (up $1.12 to $77.85, Research), Caterpillar (up $1.33 to $76.23, Research), Pfizer (up $0.34 to $26.39, Research), Merck (up $0.36 to $35.64, Research) and United Technologies (up $0.57 to $58.80, Research), which all added at least 1 percent.

Home building shares continued to rise. The Philadelphia Housing (Charts) sector index added 1.6 percent.

A variety of telecommunications and computer networking stocks rose, including Brocade Communications (up $0.33 to $6.09, Research), Extreme Networks (up $0.27 to $4.99, Research), and SBA Communications.

SBA (up $2.29 to $23.86, Research) rose more than 10.6 percent on news that it will buy fellow wireless tower owner AAT Communications for about $1 billion in cash and stock.

A number of oil stocks fell, after several up sessions. That pushed the Amex Oil (down 10.67 to 1,069.81, Charts) index down 1 percent.

Market breadth was positive. On the New York Stock Exchange, winners beat losers nine to seven on volume of 2 billion shares. On the Nasdaq, advancers narrowly topped decliners on volume of 2.58 billion shares.

The volume was much more robust than usual, due in part to the quadruple options expiration.

Friday brought the quarterly event, in which stock index options and futures, and individual stock options and futures all expire simultaneously. In the past this made for some extreme volatility, but lately it has had a more muted impact. Nonetheless, it can impact trade by increasing volume.

February industrial production rose a less-than-expected 0.7 percent, according to a morning report. Capacity utilization rose 81.2 percent, just short of forecasts.

The preliminary March reading on consumer sentiment from the University of Michigan matched the February reading at 86.7, according to a separate report. Economists surveyed by Briefing.com thought it would rise to 88.

Treasury prices slipped, raising the yield on the benchmark 10-year note to 4.67 percent from 4.64 percent late Thursday. Bond prices have been rallying for several days, and likely suffered some profit taking Friday. Bond prices and yields move in opposite directions.

U.S. light crude oil for April delivery fell 81 cents to settle at $62.77 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery fell 30 cents to $555.10 an ounce.

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