Blue chips advanced Friday as investors welcomed a strong batch of economic data and a jump in sales at General Motors Corp. (GM), shrugging off a surge in oil prices. A 14 percent decline in shares of Pixar Animation Studios (PIXR) weighed on the Nasdaq.

The Dow Jones industrial average (search) gained 28.47 points, or 0.28 percent, to end at 10,303.44. The Standard & Poor's 500 Index (search) rose 3.11 points, or 0.26 percent, to finish at 1,194.44. The technology-laced Nasdaq Composite Index (search) inched up just 0.41 of a point, or 0.02 percent, to close at 2,057.37.

For the week, the Dow ended up 0.05 percent, the S&P 500 edged up 0.24 percent and Nasdaq crept up 0.20 percent.

GM reported U.S. sales surged 41 percent in June, sending its stock up 1.9 percent to $34.65. The world's largest automaker credited an aggressive "Employee Discount for Everyone" incentive program for its skyrocketing sales.

"Autos are doing better as car sales are better. Oil prices are bouncing back and helping the energy companies," said Larry Peruzzi, senior equity trader at The Boston Co. Asset Management.

The market started the third quarter quietly as many traders left for the long holiday weekend. Stocks had dropped sharply Thursday as the Fed gave no indication it would stop its steady, gradual interest rate hikes. The central bank also raised the nation's benchmark rate a quarter percentage point to 3.25 percent on Thursday.

But some analysts felt the selloff, which slashed nearly 100 points from the Dow Jones industrials, was overdone, and bargain hunters lifted stocks Friday despite another surge in crude oil prices. Strong manufacturing data and a bullish consumer confidence report helped the major indexes stay positive.

"Clearly cooler heads are prevailing today," said Joseph Keating, chief investment officer at AmSouth Asset Management. "We're seeing a far more rational response to the Fed, and yesterday's selloff is making for a pretty good buying opportunity."

Stocks were volatile this week, swinging higher as oil prices fell, then dropping on the Fed's announcement and, finally, ending the week nearly unchanged. For the week, the Dow gained 0.05 percent, the S&P rose 0.24 percent and the Nasdaq climbed 0.2 percent.

Oil prices soared Friday as investors locked in their positions before the long weekend, though prices remained far below Monday's record-setting levels. A barrel of light crude settled at $58.75, up $2.25, on the New York Mercantile Exchange (search).

Shares of Dow component Exxon Mobil Corp. (XOM) rose 1.5 percent to $58.31. The American Stock Exchange index of energy companies climbed 2.3 percent.

Investors were encouraged by another sign of consumer optimism. The University of Michigan's (search) closely watched consumer sentiment index rose to 96 in June, better than the 94.6 reading Wall Street expected and up from 94.8 in May.

"We've got good economic numbers, strength in the economy and low inflationary pressures," said Tom Schrader, head of listed equity trading at Legg Mason Wood Walker. "These numbers indicate that the consumer is handling the higher oil prices as best as they can."

In addition, the Institute for Supply Management's (search) manufacturing index was also stronger than expected. The ISM index for June came in at 53.8, far better than the 51.5 reading economists had forecast and up from a reading of 51.4 in May. Any reading above 50 on the ISM index represents an expansion in economic activity.

The positive reports helped investors look past a drop in construction spending, which fell 0.9 percent in May — the third straight month of declines.

Bond prices plummeted after rallying Thursday in the wake of the Fed's policy announcement. The yield on the 10-year Treasury note rose to 4.04 percent from 3.92 percent late Thursday. The dollar rose against most major currencies, while gold prices moved lower.

XM Satellite Radio Holdings Inc. (XMSR) jumped 3.5 percent, or $1.16, to $34.82 after it said Friday that subscribers increased by 640,000 in the second quarter, bringing its listeners to a total of 4.4 million.

In the auto sector, Ford Motor Co. (F) rose 0.7 percent to $10.31 after it reported a 1 percent increase in unadjusted monthly U.S. auto sales. But on an adjusted basis, Ford's U.S. sales of new cars and trucks fell for the 13th consecutive month in June.

Shares of Dow component Coca-Cola Co. (KO) rose 1.1 percent, or 46 cents, to $42.21 on the NYSE. The world's largest soft drink maker, which has spent the past year and a half remodeling and introducing new products to meet new consumer tastes, is starting to make some headway on Wall Street, but it is not out of the woods yet, analysts said.

In corporate news, Pfizer Inc. (PFE) said it would drop development of two drugs, an HIV treatment and an asthma drug, after clinical trials showed the prototypes did not show enough improvements in patients. Pfizer lost 48 cents to $27.10, while German drug maker Altana AG (AAA), which had partnered with Pfizer on the asthma drug, slid 16.3 percent, or $9.32, to $48.05.on the New York Stock Exchange.

3M Co. (MMM) rose 70 cents to $73 after it said it would take a tax-related charge in the second quarter as it reinvests $1.7 billion of foreign earnings back in the United States.

Shares of Sears Holdings Corp. (SHLD) rose 2.1 percent to $153.10 on the Nasdaq after Deutsche Bank picked up coverage of the retailer with a "buy" rating, according to the MarketWatch Web site.

Trading was moderate, with 1.23 billion shares changing hands on the New York Stock Exchange, below the 1.46 billion daily average for last year. About 1.23 billion shares were traded on Nasdaq, under the 1.81 billion daily average last year.

On the NYSE, the number of shares rising outnumbered those on the decline by a ratio of about 2 to 1. On Nasdaq, advancers outpaced decliners by about 4 to 3.

The Russell 2000 index of smaller companies was up 3.38, or 0.53 percent, at 643.04.

Overseas, Japan's Nikkei stock average rose 0.4 percent. In Europe, Britain's FTSE 100 closed up 0.93 percent, France's CAC-40 climbed 0.95 percent for the session, and Germany's DAX index gained 0.67 percent.

Reuters and the Associated Press contributed to this report.