Gains were broad, with the Nasdaq closing at its highest level since 2000 and nine of the 10 major S&P 500 sector indexes rising on the day. The only declining sector was telecom, which is viewed as a defensive play. Energy .SPNY, which is closely tied to the pace of economic growth, was the day's biggest advancer, up 1.5 percent.

U.S. export prices rose 0.2 percent in January, the third straight monthly increase in a potentially positive sign for global economic demand and the outlook for American manufacturers.

In the latest data point affected by harsh winter weather, factory production fell 0.8 percent in January, the biggest drop in more than 4-1/2 years. Investors have been willing to forgive soft data of late, attributing weak results to bad weather as opposed to a slowing economy.

"While weather is often used as an excuse to get a more favorable slant on things, half the country has felt a real impact, which is enough that equity markets can look at the data and not worry about it," said Jeff Morris, head of U.S. equities at Standard Life Investments in Boston.

Despite difficult weather, the preliminary reading of the Thomson Reuters/University of Michigan overall index of consumer sentiment stood at 81.2 in February, unchanged from the final January reading.

The Dow Jones industrial average rose 126.80 points, or 0.79 percent, to end at 16,154.39. The Standard & Poor's 500 Index gained 8.80 points, or 0.48 percent, to finish at 1,838.63. The Nasdaq Composite Index added 3.35 points, or 0.08 percent, to close at 4,244.03.

The three major U.S. stock indexes scored their biggest weekly percentage gains of 2014: The Dow and the S&P 500 each rose 2.3 percent, while the Nasdaq climbed 2.9 percent. This is the second straight week of gains for all three. The benchmark S&P 500 now stands just 0.5 percent away from its all-time closing high of 1,848.38 set on January 15.

With the market within striking distance of record highs, investors have been looking for evidence that the market's valuation is justified.

"The market isn't particularly expensive, but neither does it strike me as being especially cheap," said Morris, who helps oversee USD 292 billion in assets. "It will be a tough slog for the market to move meaningfully higher from here."

Friday's advance preceded a long holiday weekend for Wall Street. The U.S. stock market will be closed on Monday for Presidents Day.

Men's clothing retailer Jos. A. Bank Clothiers Inc (JOSB.O) said it would buy outdoor wear specialist Eddie Bauer for USD 825 million from private equity firm Golden Gate Capital, spurning any merger considerations with rival Men's Wearhouse Inc (MW.N). Jos. A. Bank shares rose 0.4 percent to USD 55.12 while Men's Wearhouse stock slumped 5.3 percent to USD 44.07.

Insurer American International Group (AIG.N) on Thursday raised its dividend and announced more share buybacks as its fourth-quarter earnings beat expectations. AIG's stock fell 1.2 percent to USD 48.98.

Weight Watchers International Inc (WTW.N) plunged 28 percent to USD 22.10 after it forecast a full-year adjusted profit far slimmer than estimates.

Cliffs Natural Resources (CLF.N) rose 5.8 percent to USD 23.16 as the best performer in the S&P 500. Much better-than-expected earnings were helped by a drop in costs and higher iron ore prices.

GNC Holdings Inc (GNC.N) tumbled 14.6 percent to USD 44.72. The health supplements retailer posted weaker-than-expected quarterly results.

VF Corp (VFC.N) declined 5.1 percent to USD 56.85 after the apparel company reported fourth-quarter earnings and issued its 2014 outlook.

With 398 S&P 500 companies having posted results so far, 66.3 percent have reported earnings that beat expectations, above the historical average of 63 percent, according to a news wire data. More than 64 percent have topped estimates on revenue, above the long-term average of 61 percent.

LCA-Vision Inc (LCAV.O) jumped 28 percent to USD 5.44 after the laser vision correction services company agreed to be acquired by skin health company PhotoMedex Inc (PHMD.O) for about USD 106 million. PhotoMedex rose 1.3 percent to USD 14.

Advancers outnumbered decliners by a ratio of 2 to 1 on the New York Stock Exchange, while on the Nasdaq, nearly seven stocks rose for every six that fell.

About 5.1 billion shares traded on all US platforms, according to BATS exchange data.


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