US stocks gained on Friday as investors were cheered by data on producer prices and industrial output which indicated healthy, noninflationary economic growth and boosted cyclical shares such as Honeywell International Inc Meanwhile, Walt Disney Co, the media and entertainment company, helped support the Dow, gaining 2 percent after Merrill Lynch upgraded the stock to "buy" from "neutral," citing earnings momentum.
The Dow Jones industrial average finished up 52.17 points, or 0.50 percent, at 10,558.00. The Standard & Poor's 500 Index closed up 7.07 points, or 0.60 percent, at 1,184.52.
The Nasdaq Composite Index was up 17.35 points, or 0.84 percent, at 2,087.91.
However, for the week the Dow ended down 0.43 percent, marking its third consecutive week of losses. The S&P 500 slipped 0.14 percent and the Nasdaq dipped 0.03 percent.
Friday's rise marked a partial recovery from a sharp sell-off on Thursday, when stocks hit fresh 2005 lows partly caused by a jump in the price of oil. Friday's gains also came on the five-year anniversary of the Dow's all-time high in 2000.
"We've had a sort of rebound from the big drop yesterday," said Alfred Kugel, chief investment strategist at Stein Roe Investment Counsel, an affiliate of Atlantic Trust. "We had a bounce in the price of stocks because we went down too far. The economic news has been very good - we had a very low inflation number and a high industrial production number."
In economic data, a Federal Reserve report showed that US factories, mines and utilities boosted production by a more-than-expected 0.8 percent in December.
The Labour Department said the overall Producer Price Index dropped 0.7 percent last month - the biggest decline since April 2003. That eased concerns that the Federal Reserve will be aggressive in raising interest rates.
Industrial-related stocks were helped by the economic data, with manufacturer United Technologies Corp up 34 cents at $100.94, heavy-equipment maker Caterpillar Inc up 83 cents at $93.69, and Honeywell up 2.2 percent, or 76 cents at $35.34.
Industrials were also given a boost by Banc of America analyst Don MacDougall saying the sector offered strong growth prospects in 2005 on the back of a rebound in capital spending and buoyant energy and aerospace markets. He listed Honeywell International among his top picks for 2005.
But overall, trading was quiet as dealers wound down for the long weekend. The stock market is closed on Monday in observance of the birthday of the late civil rights leader, the Rev. Martin Luther King Jr.
Around 1.3 billion shares changed hands on the New York Stock Exchange, below the 1.46 billion daily average for last year. About 2 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
Advancers outnumbered decliners on the New York Stock Exchange by about 11-to-5 and by about 2-to-1 on Nasdaq.
Stocks shrugged off another gain in oil prices. NYMEX February crude futures rose 34 cents to settle at $48.38 a barrel, after hitting fresh six-week highs during the session. High oil prices dampen stocks as they can curb corporate profits and consumer spending - although they help energy-related stocks. Exxon Mobil Corp rose 1 percent, or 52 cents to $51.07.
Stocks also overcame another fall in the dollar - which slumped to a five-year low at 101.80 yen. A declining dollar can dissuade investment in US assets.
Walt Disney closed up 2 percent, or 55 cents at $28.30.
On Nasdaq, Internet shares gained after brokerage Piper Jaffray upgraded its rating on Ask Jeeves Inc and raised its price target on Yahoo Inc. Yahoo rose nearly 4 percent, or $1.37 to $36.70 and Ask Jeeves jumped 11 percent, or $3 to $30.04.
But Sun Microsystems Inc fell nearly 8 percent, or 36 cents to $4.22, a day after the network computer maker missed analysts' revenue expectations.