NEW YORK (CNN/Money) -
Blue chips rallied Friday, gaining for the third session as investors cheered a strong read on fourth-quarter economic growth.
The major gauges all closed higher for the week.
The broad Standard & Poor's 500 (up 11.17 to 1,211.37, Charts) index gained just over 0.9 percent, closing at a new high for the year.
The Dow Jones industrial average (up 92.81 to 10,841.60, Charts) gained just under 0.9 percent and ended the week within points of its closing high for the year.
The Nasdaq composite (up 13.70 to 2,065.40, Charts) added nearly 0.7 percent.
Treasury bond prices rose, and the dollar fell versus other major currencies.
Durable goods orders and the consumer price index set a mixed tone for the economic news this week, but Friday's GDP report was more upbeat, reassuring investors.
"The strength of the GDP report, the better-than-expected fourth-quarter earnings, are all reinforcing the idea that the economy and corporate profits are showing strong growth, and you are seeing stocks respond," said Peter Brodie, senior vice president and director of investments at Bryn Mawr Trust Wealth Management.
Next week is heavy on economic news, with reports on personal income and spending and new home sales due Monday, reads on the manufacturing and the services sector of the economy due later in the week. The big Kahuna is Friday's February employment report.
"The employment report is next week's highlight for stocks," said David Briggs, head of equity trading at Federated Investors.
Economists surveyed by Briefing.com currently expect employers to have added around 225,000 jobs to their payrolls after adding 146,000 in January.
However, there is the possibility of the number coming in even higher, analysts say. Due to the recent declines in weekly jobless claims, "I would think we're due for a bigger than expected (payrolls) number," Briggs said, and I would expect that would help sustain stock gains."
The unemployment rate, generated by a separate survey, is expected to have risen to 5.3 percent, from 5.2 percent in January.
Gross domestic product grew at a revised 3.8 annual rate in the fourth quarter, the government reported Friday, up from the initial reading of 3.1 percent and above Wall Street forecasts of 3.7 percent, according to a Briefing.com survey of economists.
GDP, the broadest measure of the nation's economy, grew at a 4 percent annual rate in the third quarter.
The GDP number seemed to fall in the not-too-hot, not-too-cold middle ground that suggests strong growth, but didn't set off alarm bells about inflation.
That encouraged investors to continue to scoop up stocks after a brutal selloff earlier in the week.
Briggs said that the buying momentum this week has likely come from big mutual funds or pension plans selling bonds and buying stocks, or companies increasing their buyback programs, more than from company-specific news or the impact of the economic reports.
In terms of trends this week, stocks in energy, materials and industrials all continued to do well. Financial shares continued to fluctuate on interest rate hike concerns and the tech sector continued to lag the broader market, although it did better toward the end of the week than it did in the beginning.
Gains covered many sectors, with 26 out of 30 Dow issues rising.
Among gainers, energy stocks were particularly strong.
Exxon Mobil (up $2.13 to $63.26, Research), a Dow stock, rose 3.5 percent after Prudential upgraded the stock and lifted its rating on the oil and natural gas sector. The Philadelphia Oil Services (Charts) index rose 1.2 percent.
Telecom stocks were active.
MCI (down $0.21 to $22.60, Research) -- the subject of a bidding war between Verizon Communications (up $0.70 to $36.20, Research) and Qwest Communications (down $0.34 to $3.86, Research) -- reported a quarterly loss Friday, versus a profit a year ago.
In its post-earnings conference call, MCI reiterated its commitment to be bought by Verizon, but said it would consider Qwest's sweetened bid, proposed late Thursday.
Shares of MCI fell 1 percent, shares of Verizon, a Dow component, rose 2 percent and shares of Qwest fell more than 8 percent.
A number of retailers rose, including Home Depot (up $0.96 to $40.58, Research), which gained two percent one day after announcing a $2 billion stock buyback program and boosting its quarterly dividend.
Kohl's (up $1.90 to $47.80, Research), which gained after reporting improved fourth-quarter earnings that topped estimates.
The morning's strong read on housing proved a boon to homebuilders, which rose on the day. The Dow Jones Home Construction (up $39.44 to $927.88, Research) index added 4.4 percent.
Existing home sales slipped to a 6.8 million unit annual rate in January, according to a report released around 30 minutes after the start of trading, little changed from December's reading of 6.81 million units. Economists thought sales would clock in at 6.7 million units, according to Briefing.com.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by more than three to one on volume of 1.52 billion shares. On the Nasdaq, winners topped losers by almost two to one on volume of 1.78 billion shares.
Oil prices reversed course, closing higher, after falling in the morning and early afternoon. U.S. light crude oil for April delivery rose 10 cents to settle at $51.49 a barrel on the New York Mercantile Exchange.
Treasury prices rose, lowering the 10-year note yield to 4.26 percent from 4.29 percent late Thursday. Bond prices and yields move in opposite directions.
In currency trading, the dollar fell against the euro and the yen.
COMEX gold rose 40 cents to settle at $436.10 an ounce.