MARKET SNAPSHOT: Dow Gain Biggest In Over 4 Months

By Anora Mahmudova, Carla Mozee and Victor Reklaitis, MarketWatch

S&P 500, Dow gain over the week

S&P 500, Dow gain over the week

NEW YORK (MarketWatch)--Wall Street closed sharply higher Friday and posted modest gains for the week as risk appetite returned after news reports that Russia ended military exercises on the Ukrainian border.

War Central: Live updates on Iraq, Ukraine and Gaza

The S&P 500 (SPX) closed 22.02 points, or 1.2%, to 1,931.59 and finished the week 0.3% higher. The Dow Jones Industrial Average (DJI) jumped 185.66 points, or 1.1%, to 16,553.93, its biggest one-day percentage gain in more than 4 months. The blue-chip index gained 0.3% over the week.

The Nasdaq Composite (RIXF) gained 36.08 points, or 0.8%, to 4,371.07 and recorded a 0.4% weekly gain.

The Russell 2000 (RUT) rose 11.8 points, or 1% to the preliminary 1,131.55 and gained 1.5% over the past five days, outperforming large-cap stocks.

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Headlines from Russia and the Middle East dominated news on Friday. Russian news agency RIA quoted a senior official saying Russia is seeking to de-escalate tensions with Ukraine, followed by another report that it ended military exercises near the border with Ukraine. Read also: Ukraine trumps Iraq: Investors' 3 biggest worries

Meanwhile, the U.S. military has struck ISIL artillery that had been used against Kurdish forces defending Erbil, the Pentagon said Friday.

"Equities are likely to trade sideways throughout August and be driven by geopolitical headline news," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "From a technical standpoint, it is a good time to add to positions as we do not expect a 10% correction at this point."

In the Middle East, Israel said Hamas had violated a 72-hour cease-fire and ordered the military to resume fire in the Gaza Strip.

Individuals stock moves

On the data front, a report on U.S. labor productivity in the second quarter showed a 2.5% rise, beating the 1.7% gain expected by economists polled by MarketWatch.

Among individual stocks, Tekmira Pharmaceuticals Corp. (TKMR) surged 45% after the Canadian drug maker said Thursday U.S. regulators are moving closer to approving its anti-Ebola drug for use on those infected with the deadly disease.

Gap (GPS)climbed 5.9% after the apparel retailer's same-store sales increased 2% in July, topping analysts' expectations.'

Sotheby's (BID) dropped 7.9% after the auction-house's second-quarter profit dropped 15%, missing Wall Street's expectations. (Read more about notable stock moves here: http://www.marketwatch.com/story/zynga-plummets-tesla-falls-short-of-record-2014-08-07.)

In other markets, oil futures (CLU4) ticked up, and gold futures (GCZ4) firmed. The 10-year U.S. Treasury note's yield recovered to 2.42% after Russia news. European stocks closed lower.

Investors had sought safety in the Japanese yen (USDJPY), and that push higher for the currency led to a 3% dive in Japanese stocks.

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