The Dow Jones industrial average was up 0.80% and ended the week at fresh record highs with a 1.7% gain.
The S&P 500 rose 0.95%, reaching new record highs and gained 2.1% for the week. The Nasdaq surged 0.97%, extending the week’s gains to 1.9%, the highest close since October 2000.
Risk appetite was boosted after data showed that U.S. consumer sentiment rose more than expected in May, climbing to an almost six year high.
The University of Michigan said its consumer sentiment index jumped to 83.7 in May, its highest level since 2007, from 76.4 in the preceding month, outstripping expectations for a reading of 78.0.
A separate report by the Conference Board showed that its index of leading economic indicators rose 0.6% in April, more than double the 0.2% increase expected by economists.
The robust data bolstered expectations that the Federal Reserve could begin to scale back its USD85 billion a month asset purchase program this year.
In the week ahead investors will be focusing on Wednesday’s Federal Reserve minutes, as well as testimony on the economic outlook and monetary policy by Fed Chairman Ben Bernanke.
In Europe, the benchmark Stoxx Europe 600 was up 0.2% on Friday. Germany's DAX climbed 0.34%, France's CAC 40 advanced 0.53%, while Britain's FTSE 100 closed up 0.53%
Asian markets were broadly higher on Friday. Japan’s Nikkei was up 0.7% to a one year high, extending the week’s gains to 3.6%.
China's Shanghai Composite gained 1.4% and ended the week 1.6% higher amid hopes that the government will step up economic reforms aimed at restructuring the economy.
Elsewhere, oil prices rose to one week highs as U.S. consumer sentiment data bolstered the demand outlook, with contracts for July delivery settling at USD96.29 a barrel, up 1.2%.
Gold declined for the seventh consecutive session, with futures for June delivery dropping 2.1% to settle at a one month low of USD1,357.75 a troy ounce.