The Dow Jones Industrial Average rose 102.69 points, or 0.63 percent, to 16,433.09. The S&P 500 added 8.76 points, or 0.45 percent, to 1,961.05. The Nasdaq Composite Index was up 26.09 points, or 0.54 percent, to 4,822.34.
The seasonally adjusted U.S. Producer Price Index (PPI) for final demand was unchanged in August, the Labor Department said Friday.
In August, a 0.4-percent rise in the index for final demand services offset a 0.6-percent decrease in prices for final demand goods.
Meanwhile, the preliminary reading of Thomson Reuters/University of Michigan's consumer sentiment index came in at 85.7 for September, well below market estimate of 91.
"The global slump in commodity prices continues to reverberate through inflation reports. Prices where they stand (or lower) will give the doves on the Fed board plenty of ammunition to argue for a very gradual approach to tightening rates, if a tightening is necessary at all," said Jay Morelock, an economist at FTN Financial, in a note.
The Wall Street remains focused on the Fed ahead of its policy meeting on Sept. 16-17, when the U.S. central bank could raise interest rates for the first time in more than nine years.
Analysts said uncertainty surrounding the Fed's decision on rate hikes at its two-day meeting next week has contributed to the recent market volatility.
For the holiday-shortened week, both the blue-chip Dow and the broader S&P 500 gained 2.1 percent, while the tech-heavy Nasdaq jumped 3.0 percent.
In other markets, oil prices dropped as the Wall Street bank Goldman Sachs slashed its forecasts for crude prices.
The West Texas Intermediate for October delivery moved down 1.29 dollars to settle at 44.63 dollars a barrel on the New York Mercantile Exchange, while Brent crude for October delivery dropped 75 cents to close at 48.14 dollars a barrel on the London ICE Future Exchange.
The U.S. dollar traded mixed against other major currencies as debate heated up over whether or not the Fed would raise interest rate.
In late New York trading, the euro rose to 1.1336 dollars from 1.1284 dollars in the previous session, while the dollar bought 120.55 Japanese yen, lower than 120.68 yen of the previous session.
Gold futures on the COMEX division of the New York Mercantile Exchange closed lower, wrapping up a third straight week of losses.
The most active gold contract for December delivery fell 6.00 dollars, or 0.54 percent, to settle at 1,103.30 dollars per ounce.