The broad rally came amid renewed investor optimism that the latest round of negotiations between the U.S. and China will lead to a resolution of the costly trade war that's unsettled markets and threatened the global economy.
Wall Street has been encouraged by the signals that Chinese and U.S. officials have sent since trade talks resumed early last week. That helped lift the market, along with better-than-expected company earnings for the fourth quarter of 2018 and the Federal Reserve's decision to take a pause on interest rate hikes.
Still, uncertainty over trade has contributed to a dimmer outlook for corporate earnings growth this year and stoked concerns about a slowing global economy. Traders also weighed a mix of company earnings reports Friday. Wayfair vaulted higher after reporting quarterly results that topped Wall Street's forecasts. Kraft Heinz plunged after disclosing a federal investigation into the company, cutting its dividend and slashing the value of its Oscar Mayer and Kraft brands.
KEEPING SCORE: The Dow Jones Industrial Average picked up 171 points, or 0.7 percent, to 26,021 as of 3:56 p.m. Eastern Time. The S&P 500 index rose 0.6 percent, while the Nasdaq composite gained 0.8 percent. Major European indexes finished higher.
THE QUOTE: "Investors are clearly optimistic that a compromise on trade talks will be coming sooner rather than later and those expectations appear to be reflected in the market rebound we see today," said Saira Malik, head of global equities at Nuveen.
"But the bigger picture is that with the market having such a nice rally year-to-date, we actually think we're in for a period of consolidation," she added. "Until you can see sustainable global economic growth, we think it's going to be tough for the market to really move a lot higher from here."
ALL ABOUT TRADE: High-level talks between the Trump administration and Chinese negotiators resumed Friday. A Chinese team led by Vice Premier Liu He was meeting with U.S. Trade Representative Robert Lighthizer and other American officials. Liu was scheduled to meet President Donald Trump in the White House on Friday afternoon.
Asked about the prospects for a deal during a late-afternoon question-and-answer session with reporters in the Oval Office, Trump said "it's probably more likely that a deal does happen." The world's two biggest economies are locked in a trade war spurred by U.S. contentions that China uses predatory tactics to overtake U.S. technological dominance, including pressuring American companies to hand over trade secrets and in some cases stealing them outright.
The Trump administration has warned it will increase its import taxes on $200 billion in Chinese goods from 10 percent to 25 percent if the two sides haven't reached a resolution by March 2. But the White House has signaled a willingness to extend the deadline if negotiators are making progress.
FURNISH THIS: Wayfair jumped 28.3 percent after the online home furnishings retailer reported quarterly results that topped Wall Street's forecasts. LIT UP: Universal Display climbed 22.6 percent after the LED technology company posted better-than-expected quarterly earnings and its guidance surpassed investor expectations.
HOME SWEET HOME: Zillow Group climbed 24.3 percent a day after the online real estate information company issued quarterly earnings that topped analysts' expectations. The company also said co-founder Rich Barton has been named chief executive. Barton previously held the job from 2005 until 2010.
KRAFT SQUEEZED: Kraft Heinz plunged 27.8 percent after the packaged foods company posted a stunning $12.6 billion fourth-quarter loss as it slashed the value of its Oscar Mayer and Kraft brands by $15.4 billion. The company also disclosed a federal investigation into its procurement operations.
DARK CLOUD: Dropbox slid 8.5 percent after the online data storage company issued a disappointing outlook. LICKED: Stamps.com plunged 57.3 percent after the online shipping and postage company ended its exclusive partnership with the U.S. Postal Service and gave a weak forecast.
OIL: Benchmark U.S. crude rose 0.5 percent to settle at $57.26 a barrel in New York. Brent crude, used to price international oils, gained 0.1 percent to close at $67.12 a barrel in London. METALS: Gold rose 0.4 percent to $1,332.80 an ounce. Silver gained 0.7 percent to $15.91 an ounce. Copper climbed 1.9 percent to $2.95 a pound.