The Nasdaq rose 35.44 to 1,933.14, and the Dow Jones industrial average gained 86.02 to 9,475.50.
After pulling out of bear market territory late Thursday--the Dow was down 20 percent from its high--blue chips continued to rally along with technology stocks Friday.
"People were encouraged by the big turnaround yesterday toward the end of the day, and there is some more follow-through today, especially in technology," said Guy Truicko, a portfolio manager at Unity Management, which oversees more than $1 billion in assets.
There was also a dose of good news on the earnings front to encourage bargain hunters.
WebMD was up 63 cents to $6.44, or 15 percent. The company topped estimates in the fourth quarter. SG Cowen upgraded the stock to "strong buy" from "buy."
Micron Electronics, down 13 cents to $3.31, said it is exiting the PC business and merging with Web hosting company Interland in a $130 million stock deal that will transform the company into a hosting firm.
Data storage products company Adaptec, down 19 cents to $9.44, issued its second profit warning this month, citing an oversupply of products in the hands of its distributors.
Among other notable issues, Amazon.com was up 25 cents to $10.44; AOL Time Warner gained $1.97 to $38.74, and Yahoo fell 25 cents to $14.63.
Cisco Systems fell 6 cents to $19.69; Intel rose 63 cents to $29.31; Oracle rose 63 cents to $16.12, and Microsoft was up $2 to $56.