The major averages rose sharply on Friday in response to a new round of bank earnings and promising economic data as fears of a 100 basis point rate hike from the Federal Reserve to subdue rising inflation subsided. The Dow Jones Industrial Average popped 658 points, or 2.15%. The S&P 500 jumped 72 points or 1.93% while the Nasdaq Composite added 201 points or 1.79%,

Despite Friday's rally, all the major averages closed out the week with losses. The Dow slipped 0.2% while the S&P and Nasdaq fell 0.9% and 1.6%, respectively. The session's moves snapped the S&P 500 out of bear market territory and roughly 19% off its highs.

A new round of bank results from Wells Fargo and Citigroup offered further insight into the state of the economy. Wells Fargo popped 6.2% even as quarterly profits declined 48% and the bank set aside funds for bad loans. Citigroup soared 13.3% as it beat estimates and benefited from a rising rate environment.

A day earlier, investors combed through troubling reports from JPMorgan Chase and Morgan Stanley, which kicked off major bank earnings, and also weighed the likelihood of larger interest rate hikes from the Federal Reserve and looming recession concerns.

Along with fresh bank earnings, traders digested strong preliminary consumer sentiment data and retail sales that beat expectations. Those numbers appeared to soothe concerns that the Fed will hike by 100 basis points at upcoming policy meetings and indicated that consumers are bolstering retail spending even as inflation hits record highs.

Meanwhile, comments from Atlanta Fed President Raphael Bostic on Friday indicated that he likely would not support a potential higher rate move. He cautioned that swiftly increasing rates could "undermine a lot of those things that are working well."

Friday's results motivated a broad-based rally across the S&P 500, with all major sectors ending the session in positive territory. Financials jumped 3.5% boosted by surging bank shares while healthcare bounced 2.5% following strong earnings results from UnitedHealth. Consumer staples marked the only sector to close out the week marginally higher.

Battered tech stocks also jumped on Friday. Meta Platforms, Salesforce and Amazon gained 4.2%, 3.9% and 2.6%, respectively, while Netflix soared 8.2%. UnitedHealth, JPMorgan Chase and American Express led the Dow's recovery, rising about 5.4%, 4.6% and 4.4%, respectively.

In other news, Pinterest shares surged 16.2% following a Wall Street Journal report that said activist investor Elliott Management took a stake of more than 9% in the social media company.