Stocks end higher for third consecutive week 

Stocks finished modestly higher Friday with major indexes posting their third week in positive territory and the Dow and S&P 500 closing at new record highs.

The Dow Jones Industrial Average rose 35.87 points, to close at 15,118.49, led by Hewlett-Packard.

The S&P 500 climbed 7.03 points, to finish at 1,633.70. The Nasdaq rallied 27.41 points to end at 3,436.58. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, ended below 13.

For the week, the Dow advanced 0.97 percent, the S&P 500 jumped 1.19 percent, and the Nasdaq added 1.72 percent. UnitedHealth was the best weekly performer on the blue-chip index, while McDonald's sagged.

All three major indexes are up between 13 percent and 15 percent so far this year.

Among key S&P sectors, industrials and consumer discretionary led the weekly gainers, while utilities and consumer staples dropped.

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Federal Reserve Chairman Ben Bernanke said the shadow banking system continued to pose a threat to financial stability, and that bank funding markets might still not be able to cope with a major default. In addition, Bernanke also said the central bank was closely monitoring asset markets for signs of excessive risk taking.

Dell edged higher following news that Billionaire investor Carl Icahn is teaming up with Southeastern Asset Management to bid for the tech company, proposing an alternative to the $24.4 billion buyout proposed by founder Michael Dell and private equity firm Silver Lake partners.

Icahn criticized the proposed $24.4 billion buyout on CNBC, calling it a "great giveaway."

Among earnings, ArcelorMittal rallied after the steelmaker posted a narrower-than-expected decline in earnings and maintained its profit forecast for the year, thanks to deep cost-cutting in Europe.

Priceline.com poked higher after the travel website topped quarterly expectations, but handed in a weaker-than-expected forecast for the second quarter, citing the effects of global expansion costs. Still, at least two brokerages raised their price targets on the firm.

So far, 90 percent of S&P 500 companies have posted quarterly results, with 67 percent topping earnings expectations and 24 percent missing forecasts, according to Reuters. If all remaining companies post numbers in line with estimates, earnings will be up 5.3 percent on last year.

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But sales have come in 1 percent below estimates on average, with only 46 percent of companies beating their revenue projections.

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Next week, a handful of major retailers including Macy's, Wal-Mart, Kohl's, Nordstrom and JCPenney are scheduled to post results.

Gap soared to lead the S&P 500 gainers after the clothing retailer posted a 7 percent gain in April same-store sales, thanks to a surge at its Old Navy chain, and handed in a profit forecast that was also above Wall Street expectations. Canaccord Genuity lifted its price target on the company to $40 from $39 a share.

True Religion surged after the premium jeans maker said it would be acquired by investment management firm TowerBrook Capital Partners in a deal worth approximately $835 million.

Gold fell 2 percent to a two-week low, on track for its biggest one-day drop since mid-April, as a breach of key chart levels prompted further heavy selling. Most gold miners were in the red, led by Iamgold, Harmony Gold and Kinross.

In Asia, Japan's Nikkei extended its bull run, after the yen weakened through the key 100-mark against the U.S. dollar for the first time in four years.

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Meanwhile, G7 finance ministers and central bank governors from the U.S., U.K., Canada, France, Germany, Italy and Japan are meeting in the U.K. on Friday. They are expected to discuss whether central banks can do more to encourage the fragile global recovery at the two-day event.

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—By CNBC's JeeYeon Park. Follow JeeYeon on Twitter: @JeeYeonParkCNBC