NEW YORK (CNNMoney.com) -- Stocks rallied Friday, helping the Dow Jones Industrial average notch it's biggest weekly percentage gain in over a year, after the latest GDP report gave investors reason to believe that the Federal Reserve won't raise interest rates again in August.

Oil lost over a dollar, bonds rose and the dollar fell.

The Dow (up 119.27 to 11,219.70, Charts) gained 1.1 percent.

The tech-heavy Nasdaq composite (up 39.67 to 2,094.14, Charts) added 1.9 percent and the broader Standard & Poor's 500 index (up 15.35 to 1,278.55, Charts) advanced around 1.2 percent.

The major stock gauges jumped Monday and Tuesday but ended slightly lower Wednesday and stumbled Thursday as the technology sector turned negative late in the session.

But after Friday's gains, the Nasdaq rose 3.5 percent for the week, the S&P 500 was up 3 percent and the Dow industrials added 3.1 percent, marking the biggest weekly percentage gain since May 20, 2005, according to Ned Davis Research.

Before the opening bell, a report on gross domestic product, the broadest measure of the nation's economic activity, confirmed a slower economy and raised the possibility of a pause from the Fed.

The Commerce Department said GDP grew at a 2.5 percent annual rate, in the second quarter, down from the 5.6 percent growth logged in the first quarter. Economists surveyed by Briefing.com had forecast growth of 3 percent in the most recent quarter. (Full story.)

"What we're seeing is a little bit of market anticipation that the Fed might pass on the rate hike in August," according to Fred Dickson, chief market analyst at D.A. Davidson & Co.

"But the last two times this has happened, the market rallied in anticipation of the same thing [in May and June] and then you had nasty selloffs," Dickson said.

"The big question will be what happens next," he added. "The economic data next week will be looked at very closely."

Economic numbers on tap include the Chicago PMI, ISM and the jobs report on Friday. Economists surveyed by Briefing.com expect 140,000 jobs to have been created in July.

Gains were broad based, with 29 out of 30 Dow components rising.

Dow component Wal-Mart (up $0.93 to $44.46, Charts) announced it is pulling out of Germany and taking a $1 billion charge related to the move, sending shares up 2 percent.

And Krispy Kreme Doughnuts (up $0.40 to $8.25, Charts) was up 5 percent after the company said it agreed to buy three stores in Southern California for $2.9 million as part of a legal settlement with its franchisee in the region.

Shares of KLA-Tencor (up $2.28 to $42.36, Charts) added over 5 percent after the supplier of tools for making microchips said Thursday that quarterly revenue rose 18 percent.

On the downside, shares of Chevron (down $1.68 to $66.05, Charts) fell 2.5 percent after the oil company reported that quarterly profit rose, driven by a surge in crude oil prices, but the results fell short of expectations.

McAfee (down $1.67 to $22.35, Charts) tumbled 7 percent after the antivirus software maker reported a lower quarterly net profit and said it would likely restate past financial results. The company was also downgraded by WR Hambrecht to "hold" from "buy."

Health insurer Coventry Health Care (down $2.05 to $51.86, Charts) posted second-quarter profit that beat expectations but shares fell nearly 4 percent on fears of a potential pricing war.

Oil services firm Baker Hughes (down $2.95 to $77.90, Charts) also posted higher earnings, but its cautious outlook sent shares down over 3 percent.

Auto parts supplier Lear (down $1.25 to $22.82, Charts) reported a narrower quarterly net loss but still came in below expectation and the stock slid 5 percent.

And Office Depot (down $2.81 to $34.34, Charts) sank nearly 8 percent after the office supplier said second-quarter earnings rose 18 percent but sales at stores opened more than a year softened.

Market breadth was positive. On the New York Stock Exchange, winners topped losers four to one on volume of 1.7 billion shares. On the Nasdaq, advancers topped decliners more than two to one on volume of almost 1.9 billion shares.

Light, sweet crude oil for September delivery fell $1.30 to $73.24 a barrel on the New York Mercantile Exchange.

Treasury prices rose, lowering the yield on the benchmark 10-year note to about 4.99 percent from 5.04 percent late Thursday. Bond prices and yields move in opposite directions.

COMEX gold for December delivery added $2.30 to $647.80 an ounce.

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