Wall Street closed on Friday in an ebullient mood as the Dow Jones industrial average finished a strong week hitting a fresh five-year high.

All the major indexes finished the week with sturdy gains as traders showed optimism about recent economic data on inflation, housing and retail sales.

The Dow climbed 26.41, or 0.23 percent, to 11,279.65, its highest level since reaching 11,301.74 on May 21, 2001.

Broader stock indicators also gained ground. The S&P 500 index rose 1.92, or 0.12 percent, to 1,307.25 — its highest close since it reached 1,309.38 on May 22, 2001 — and the Nasdaq composite index added 6.92, or 0.3 percent, to 2,306.48.

Both the S&P 500 and Nasdaq registered their best weekly gains since January, while the Dow put in its best weekly performance in almost a month.

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A rebound in manufacturing activity and lower oil prices, combined with activity in home building, industrial and interest-rate sensitive stocks, drove the rally that pushed the market. Homebuilding stocks were up nearly 8 percent on the week.

Investors also pounced on shares of industrial companies like Boeing Co. (BA) and United Technologies Corp. (UTX) after a Federal Reserve report signaled strength in the industrial sector. Output from U.S. factories, mines and utilities rose 0.7 percent in February following a decline of 0.3 percent the month before.

The promising economic report overshadowed downbeat earnings news from General Motors Corp., which said its 2005 loss was $2 billion more than originally reported. Insurance firm American International Group Inc. (AIG) also posted a steep drop in profit from settling regulatory charges.

Earlier in the week, the market drew on the Fed's optimism about the momentum the economy is carrying into spring.

Adding to the positive mood was a prediction by The American Bankers Association, which said on Friday that the Fed is likely to wrap up its campaign to boost interest rates by midyear.

The U.S. central bank has raised benchmark rates in 14 straight small steps dating to June 2004 as it sought to bring them to more normal levels from an ultra-low 1 percent put in place amid the sluggish recovery from the 2001 recession.

Hiring gained ground in February with employers adding 243,000 jobs, the most in three months, according to a report released by the Labor Department. The report showed that job gains were fairly broad-based and suggested the jobs climate is gaining momentum.

Heavy equipment maker Caterpillar (CAT) shares rose 1.8 percent, or $1.33, to $76.23 on the New York Stock Exchange, while shares of aerospace and industrial conglomerate United Technologies (UTC) gained 1 percent, or 57 cents, to $58.80.

Caterpillar shares hit a record high of $76.30. Shares of fellow Dow component Boeing Co. (BA)rose 1.5 percent, or $1.12, to $77.85 after hitting a record high of $78.08.

GM (GM) shares slid 4.9 percent, or $1.09, to $21.13 after it reported its 2005 loss was $2 billion deeper than previously reported.

Shares of AIG, the world's largest insurer by market value, fell 0.6 percent, or 42 cents, to $68.82 after the company posted a 72 percent drop in fourth-quarter profit.

Among the day's gainers, shares of Genentech Inc. (DNA) rose 6.7 percent, or $5.55, to $88.14 after the biotech company raised its current year and five-year earnings growth forecasts.

On the Nasdaq, shares of Sirius Satellite Radio Inc. (SIRI) rose 8.4 percent, or 38 cents, to $4.89 after the company said it will be the exclusive provider of the pay-radio service to automaker Volkswagen AG's namesake brand and its premium Audi AG affiliate.

Trading was heavy on the NYSE, with about 2 billion shares changing hands, above last year's daily average of 1.61 billion, while on Nasdaq, about 2.56 billion shares traded, above last year's daily average of 1.80 billion.

Advancing stocks outnumbered declines by a ratio of 9 to 7 on the NYSE and by 8 to 7 on Nasdaq.

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The Associated Press and Reuters contributed to this report.