NEW YORK (CNNfn) - The Nasdaq composite index surged more than 70 points Friday, extending three straight sessions of gains and closing the week up 5 percent.
The gains came on the back of strong corporate quarterly reports from technology firms, putting the index 25 percent above its May 23 low of 3,164.
"There's no question it's earnings-driven," said Peter Cardillo, research director of Westfalia Investments. "The rally continues to move ahead but on a rotation basis. There are two things driving the market - earnings and economic data. Today's market seems more based on earnings than economic data."
 Strong earnings reports led the tech rally. Chip maker Altera and network equipment maker Juniper Networks came in with positive reports, helping the Nasdaq composite index rally 71.13 points, it was up 71.68 points, or nearly 2 percent, to 4,245.99 - less than 200 points shy of its April 7 close of 4,446.45. Still, the index is 16 percent below its 5,048 mark set March 10, during one of the most speculative times of the tech bull run.
Meanwhile, the Dow Jones industrial average waffled between positive and negative territory, with J.P. Morgan giving the blue chips a boost. But pressuring "old economy" stocks were two key economic reports that didn't convince investors the Federal Reserve finally is finished raising interest rates.
 The Dow did manage to gain 24.04 to close at 10,812.75. And for the week, the blue chip index gained 1.5 percent. The broader S&P 500 advanced 13.18 to 1,509.02.
Market breadth was positive. On the New York Stock Exchange, advances outpaced declines 1,580 to 1,286, as more than 948 million shares changed hands. On the Nasdaq, winners beat losers 2,181 to 1,789, as more than 1.6 billion shares were traded.
In currency markets, the dollar rose against the euro but slipped versus the yen.
Investors cheer earnings to send Nasdaq higher
Some analysts suggested the market should not be too worried about the economy turning sour as companies, particularly in the technology sector, continue to come out with positive earnings reports.
"As long as we continue to see good earnings and the reaction to good earnings positive, then you will see Nasdaq as the sector of choice," said Barry Hyman, chief market analyst at Ehrenkrantz King Nussbaum. "The Dow is being weighted by this conflicting (economic) story -- stronger consumer spending and OK-looking inflation numbers. But the tech (sector) is merrily rolling along."
Brian Finnerty, head of Nasdaq trading at C.E. Unterberg Towbin, told CNN's In the Money that a more positive mindset is greeting the second-quarter earnings results than just three months ago. (445K WAV) (445K AIFF)
Chip maker Altera (ALTR: Research, Estimates) surged 8-7/16 to 119-1/2 after reporting second-quarter earnings of 49 cents a share, up from 25 cents a share in the year-earlier period.
Juniper Networks (JNPR: Research, Estimates) gained 5-1/4 to 174-3/4 after reporting second-quarter net income that was double analysts' estimates, as its revenue soared.
 PMC-Sierra (PMCS: Research, Estimates) fell 10-3/8 to 218-9/16 after the chip maker reported pro forma second-quarter earnings, before one-time items, of 23 cents a share. Analysts had expected the company to earn 19 cents a share, according to First Call, but a trader at Bernard L. Madoff Securities in London said investors were cashing in on gains.
Vitesse Semiconductor (VTSS: Research, Estimates) fell 11-1/8 to 75-9/16 after reporting fiscal third-quarter operating profits in line with expectations, as sales at the maker of semiconductors for optical networking gear rose 56 percent.
"Retail sales numbers were stronger than expected, and that shows that consumer are still spending, and I think that is weighing on the market today and it should," said Hyman. "But it's not weighing on the Nasdaq, where you're seeing those really good earnings reports. People really regard tech as the place to make money."
Dow boosted by J.P. Morgan
Financial issues helped give the Dow a boost. J.P. Morgan (JPM: Research, Estimates) jumped 4-3/8 to 128-1/2, American Express (AXP: Research, Estimates) gained 2 to 57-1/16, and Citigroup (C: Research, Estimates) advanced 1-5/16 to 67-15/16.
Helping financial stocks was a report by Merrill Lynch, which raised its rating for J.P. Morgan to an intermediate-term "buy" from "accumulate" based on valuation.
But investors showed a lack of confidence that the Federal Reserve may be finished or near the end of its rate tightening cycle after the economic data painted a mixed picture of an economic deceleration.
Energy price hikes drove up wholesale prices in line with forecasts, but the core price measure was weaker than expected, lessening inflation concerns, government reports indicated Friday. However, overall retail sales came in higher than expected.
The Federal Reserve's monetary policy-making body does not meet again until Aug. 22, but speculation already has taken hold as investors seize on any economic data that could indicate what might happen at that meeting.
In a closely watched economic indicator next week, investors will wait for the consumer price index and will also keep an ear out for what Fed Chairman may say when he testifies before the Senate Banking Committee on July 20.
Rising interest rates normally have an adverse affect on investor sentiment as they can hurt corporate profitability. But analysts were not overly concerned that the economic data would keep investors sidelined.
"Stocks opened fairly strong. We had some positive earnings from the tech sector and they're still holding onto some gains, but the rest of the market has very little to be happy about in (Friday's) economic report," said Bill Meehan, chief market analyst at Cantor Fitzgerald
 The data pressured the Dow, which was hit by selling in cyclical stocks, particularly drug issues. Johnson & Johnson (JNJ: Research, Estimates) fell 3-7/16 to 91-13/16 and Merck (MRK: Research, Estimates) lost 1-3/4 to 67-3/8.
Merck was under pressure after an advisory committee of the Food and Drug Administration recommended against the approval of an over-the-counter version of Merck's cholesterol-lowering drug, Mevacor.
Also weighing on investor sentiment about drug stocks were the prospects for a government initiative that could lower prescription drug costs for the elderly, which could hurt pharmaceutical companies' profitability.
Earnings will continue to be a factor in the coming week. Eleven Dow members post results in the days ahead including Citigroup, Coca-Cola, General Motors and IBM. Technology bellwethers Intel, Apple Computer, Lucent, Qualcomm and Sun Microsystems will also report.
For a closer look at the day's earnings, click here
For a closer look at the day's movers, click here
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