Stocks finished the week with a big gain as crude oil had its biggest one-day drop in percentage terms since 2004 and financial stocks rallied.
The Dow Jones industrials closed up 198 points, or 1.7%, on Friday to 11,628. The Standard & Poor's 500 Index rose 14 points, or 1.1%, to 1,292, and the Nasdaq Composite Index added 34 points, or 1.4%, to 2,415.
The gains for the three indexes were their best since Aug. 8. For the week, the Dow finished with a small loss, because of 100-plus-point losses on Monday and Tuesday. The S&P 500 was off 0.5%, and the Nasdaq Composite was off 1.5%.
Crude in New York closed down $5.69, or 4.4%, to $114.59 a barrel. The decline took back Thursday's gain of $5.62 to $121.18. The dollar decline in crude was its largest since Jan. 17, 1991, when it fell $10.56 a barrel to $21.48.
Crude is now down more than 22% from its intraday high of $147.27 on July 11, and the retail price of gasoline now averages $3.692 a gallon, according to AAA's Fuel Gauge Report released Friday. That's down 10.3% from a high of $4.114 on July 17.
The U.S. dollar was the big reason that oil dropped. The greenback was up more than 1% against the British pound and the Japanese yen and 0.5% against the euro.
Berkshire Hathaway's (BRK.A, news, msgs) Warren Buffett told CNBC Friday that he is no longer betting against the dollar. He also said he thought U.S. stocks were more attractively priced.
* Top Stocks Blog: Berkshire Hathaway won't bet against dollar
The bullish close for stocks -- the market's third daily gain in a row -- should put traders and investors in a good mood for next week, but the market faces some strong headwinds, including important reports on existing- and new-home sales on Monday and Tuesday.
In addition, the Federal Reserve will release the minutes of the Federal Open Market Committee's Aug. 5 meeting, and the government will release a revision of its estimates for second-quarter gross domestic product.
However, trading volume is likely to be even lighter than this week because so many money managers and traders will disappear ahead of the Labor Day weekend. New York Stock Exchange volume was 888 million shares on Friday; 1.6 billion is normal. Nasdaq volume was 1.4 billion shares; 2 billion is normal.