U.S. stocks rallied after General Electric raised its earnings forecast, bolstering confidence about the outlook for corporate profits. The Standard & Poor's 500-stock index set a four-year high in wrapping up its fourth straight weekly gain.
GE's estimate for 2006 followed a drop in oil prices to a five-month low and reports earlier in the week that showed the U.S. economy is growing without a pickup in inflation.
The S&P 500 increased 5.47, or 0.4 percent, to 1248.27, a level not seen since June 2001. The Dow Jones industrial average rose 46.11, or 0.4 percent, to 10,766.33. The Nasdaq composite index increased 6.61, or 0.3 percent, to 2227.07.
This week, the S&P 500 was up 1.1 percent, notching its best weekly winning streak since July. The Dow added 0.8 percent for its fourth weekly gain. The Nasdaq rallied 1.1 percent and is at its highest level in more than four years.
"The planets are lining up for the U.S. stock market," said Brian Stine, an investment strategist at Allegiant Asset Management in Cleveland, which manages $27 billion. "Oil prices are falling and the economic figures look good."
A series of economic reports over the past five days, including ones on industrial production, initial unemployment claims, and consumer prices, suggested the economy is continuing to grow while inflation is tame.
GE advanced $1.09, or 3.1 percent, to $35.75, its biggest gain since January 2004. The company increased its 2006 profit forecast after Swiss Reinsurance, the world's No. 2 reinsurer, said it agreed to buy GE Insurance Solutions for $6.8 billion.
General Motors gained for a second day after hitting a 14-year low, rising $1.42, or 6.3 percent, to $24.05, for the best performance in the Dow average.
Merck added 81 cents, to $30.42. The third-largest U.S. drugmaker said its MK-0518 experimental drug reduced the level of HIV-RNA, a measure of infection with the AIDS virus, 98 percent after a 10-day trial.
Scientific-Atlanta, the second-largest U.S. maker of set-top boxes for cable-television, gained 70 cents, to $42.15, after Cisco Systems agreed to purchase the company for $6.9 billion to enter the Internet TV market. Cisco lost 35 cents, to $17.02.
Walt Disney Co., the second-largest U.S. media company, lost 79 cents, or 3 percent, to $25.20, for the worst performance in the Dow average. The company's fourth-quarter sales missed analyst estimates after movie flops such as "Dark Water" and "The Brothers Grimm."
Gap, the largest U.S. clothing chain, lost $1.45, to $17.06. The company said profit will be $1.12 to $1.17 a share this year, down from a previous estimate of $1.30 to $1.34, because of discounts.
New York Stock Exchange composite index rose 33.46, to 7634.58.
American Stock Exchange index rose 1.48, to 1702.32.
Russell 2000 index of smaller-company stocks rose 5.08, to 672.22.
NYSE: 2.45 billion shares, up from 2.29 billion on Thursday. Advancers outnumbered decliners 3 to 2.
Nasdaq: 2.03 billion shares, up from 1.84 billion. Advancers outnumbered decliners 3 to 2.
Crude oil for December delivery: $56.14, down 20 cents.
Gold for current delivery: $485.60 a troy ounce, down from $486.20 on Thursday.