US stocks notched a sixth straight week of gains behind improving economic data, but analysts warned the rising odds of higher interest rates will challenge the durability of the rally.
Gregori Volokhine, president of Meeschaert Capital Markets, said the increasing likelihood of higher US interest rates pushed the dollar up this week, a market move with broad implications for equities in the weeks ahead.
"A strong dollar is not a guaranteed positive for everyone, especially energy producers and US exporters," Volokhine said. "The market must digest this rally."
There is also a sense US stocks must pause after climbing so far so fast.
"We've come a long way and the market needs to take a breather while it digests the information," said Tom Cahill, portfolio strategist at Ventura Wealth Management.
"The S&P 500 is moving into a resistance area around 2,100 and it's going to take some time to build up the strength to go through that."
For the week, the Dow Jones Industrial Average rose 246.79 points (1.40 percent) to 17,910.33.
The broad-based S&P 500 added 19.84 (0.95 percent) at 2,099.20, while the tech-rich Nasdaq Composite Index advanced 93.37 (1.85 percent) to 5,147.12.
- Rate hike 'live possibility' -
News was dominated by the Fed and the implications of economic data for US monetary policy.
On Wednesday, Federal Reserve Chair Janet Yellen told a congressional panel a December hike in interest rates was a "live possibility" with the US economy improving.
Those odds increased significantly Friday after the Labor Department reported that the US economy added 271,000 jobs in October, 90,000 more than analysts expected. The agency also reported a solid 2.5 percent rise average hourly pay.
"This gives the Federal Reserve all the ammunition it needs to justify moving rates in December," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.
"If they backed off now, I think all of us would have whiplash."
The Institute for Supply Management offered a lackluster reading on manufacturing sector activity, but other economic data were solid.
Construction spending in September came in at a seven-year high, while the ISM's report on the service sector rose. US auto sales also had another strong month in October.
In earnings news, Disney enjoyed a 7.3 percent rise in quarterly profits to $1.6 billion thanks to its ESPN sports network and parks and resorts business, but Rupert Murdoch's Twenty-First Century Fox saw profits tumble 35 percent to $675 million due in part to dismal performance of the "Fantastic Four" movie.
Facebook became the latest big tech company to wow markets, garnering an 11 percent rise in third-quarter profits to $891 million behind a 41 percent surge in revenues to $4.5 billion, with big gains in mobile advertising.
The week's disappointments included online coupon company Groupon, which reported a net loss of $27.6 million in the third quarter and announced that chief operating officer Rich Williams would take over as chief executive. Investors were unimpressed, dumping Groupon shares 26.4 percent for the week.
The week saw several small and medium-sized acquisitions, including the $5.9 billion takeover of "Candy Crush" videogame creator King Digital Entertainment by Activision Blizzard.
Other deals included a $5.9 billion purchase of biopharmaceutical company Dyax by Dublin-based Shire; a $2.7 billion purchase of ZS Pharma by AstraZeneca; and the $3.9 billion buyout of vacations listing service HomeAway by Expedia.
Next week's calendar includes the October retail sales report, as well as earnings from Viacom and Cisco Systems. McDonald's will also hold an investor day in New York where it is expected to update the market on its turnaround plan.