All three stock indexes gained on Friday, headed for weekly gains as investors took comfort from data pointing to robust economic activity in the world's biggest economy.
A measure of business activity raced to a 31-month high in November, boosted by hopes for lower interest rates and more business-friendly policies from President-elect Donald Trump's administration next year.
The domestically focused small-cap Russell 2000 index outperformed large-cap indexes with a 1.7 per cent rise. The index hit its highest in more than a week and was set for weekly advances of nearly 4 per cent.
Meanwhile, Alphabet lost 1.4 per cent, following Thursday's 4 per cent drop, as the U.S. Department of Justice argued to a judge the company was monopolizing online search.
AI bellwether Nvidia fell 3.2 per cent on Friday in choppy trading following its quarterly forecast on Wednesday.
An index tracking S&P 500 value stocks outperformed with a 0.74% rise as investors rotated out of their growth peers .
"I've been looking for this leadership change to go from technology to everything else. I think we may be in the midst of that shift. Small caps are acting much better, values are acting better," said Mark Hackett, Chief of Investment Research at Nationwide.
At 2:00 p.m. ET, the Dow Jones Industrial Average rose 344.79 points, or 0.79 per cent, to 44,218.78, the S&P 500 gained 16.51 points, or 0.28 per cent, to 5,965.22 and the Nasdaq Composite gained 20.38 points, or 0.11 per cent, to 18,992.80.
The S&P and the Dow reached one-week highs on Friday.
The S&P 500 communication services sector led declines with a 0.4 per cent loss. Consumer discretionary stocks boosted the S&P, rising 1.3 per cent.
Expectations on the Federal Reserve's policy move in December have recently swayed between a pause and a cut, as investors weigh the likely impact of Trump's plans on price pressures.
There is a 59.6 per cent probability the central bank will lower borrowing costs by 25 basis points, as per the CME Group's FedWatch Tool.
Geopolitics were top of mind this week as investors monitored a missile exchange between Ukraine and Russia, after Moscow lowered its threshold for a nuclear retaliation. The markets are also awaiting Trump's Treasury Secretary pick.
"The fact that we've been calm on a nice, steady stair step pattern higher is very encouraging and reflective of the fact that investors aren't acting with the emotion that they could be given the amount of uncertainties we've faced," Hackett said.
In company news, Gap Inc jumped 11 per cent after the Old Navy parent raised its annual sales forecast and said the holiday season was off to a "strong start".
Intuit lost 5.3 per cent after the TurboTax parent projected second-quarter revenue and profit below Wall Street estimates on Thursday.
Advancing issues outnumbered decliners by a 3.19-to-1 ratio on the NYSE, and by a 2.43-to-1 ratio on the Nasdaq.
The S&P 500 posted 78 new 52-week highs and no new lows while the Nasdaq Composite recorded 156 new highs and 69 new lows.