The Dow jumped more than 600 points as investors cheered June's retail sales figures.
Consumer spending ticked up 1% last month, exceeding economists expectations.
Still, Deutsche Bank said in a note Friday that the market is now pricing in a 100% chance of recession this year.
US stocks closed the week on a high note, with the Dow Jones Industrial Average surging more than 600 points after a strong retail sales report helped soothe some concerns of a pending economic downturn.
Spending by consumers increased 1% in June, ahead of economists' expectations. The University of Michigan's consumer sentiment survey also showed consumers expect inflation to come down.
"There still remains a good chance that we will see stocks make fresh lows, but now appears to be the time for some traders to test the waters," wrote Edward Moya, senior analyst at Oanda in a note.
The data, along with comments from Federal Reserve officials over the past two days, have helped calm some of the market's jitters that the central bank would deliver an even bigger rate hike this month than the 75-basis-point increase in June.
Here's where US indexes stood after the 4 p.m. closing bell on Friday:
S&P 500: 3,863.16, up 1.92%
Dow Jones Industrial Average: 31,288.19, up 2.15% (656.02 points)
Nasdaq Composite: 11,452.42, up 1.79%
Despite some promising economic data, Deutsche Bank said that markets are pricing in a 100% chance of a recession this year. Bank of America this week also updated its outlook to say that a recession will take hold this year and last through early 2023.
Famed economist Paul Krugman wrote in a New York Times op-ed that there are good reasons to believe that the worst of inflation is over, and that markets are signalling that prices will start coming down.
Europe is now the biggest customer for US oil, surpassing Asia as the continent deals with tight supplies amid Russia's war on Ukraine. It's the first time Europe has overtaken Asia since 2016.
SEC head Gary Gensler said the agency could consider waiving some securities rules for crypto firms in order to encourage them to comply. "The public is largely unprotected due to non-compliance in this space," he said.
Oil prices edged higher as Bloomberg reported that President Joe Biden would depart the Middle East without concrete news to announce around a deal to increase crude production.
West Texas Intermediate was up 1.9% to $97.58 a barrel. Brent, oil's international benchmark, climbed 1.9% to $100.99.
Gold dipped 0.15% to $1,703.20 per ounce. The yield on the 10-year Treasury eased 3.5 basis points to 2.92%
Bitcoin rallied 2.2% to $21,135.
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