U.S. Stocks gained the most in two weeks, after news of a possible foreign investment in Merrill Lynch and a government report that consumer spending increased in November by the most in two years.

Financial stocks rose on Friday after a highly volatile week of trading. Several major brokers reported fourth-quarter earnings, with varying results, including Bear Stearns, Lehman Brothers, Morgan Stanley and Goldman Sachs.

Merrilly Lynch, which could face $8 billion in write-downs after similar reductions, reported a loss of $2.3 billion in the third quarter. However its stock rose on the possibility that it may receive a $5 billion cash investment from Singapore's state investment company, Temasek. Shares were up 64 cents, or 1.19 percent to $55.14.

The S&P 500 added closed up 24.89 points, or 1.7 percent at 1,485.01. The Dow Jones Industrial Average climbed208.83, or 1.58 percent to 13,454.47. The Nasdaq Composite Index increased 51.13, or 1.94 percent to 2,691.99. Three stocks rose for every one that fell on the New York Stock Exchange.

Tech stocks were also on the rise as strong earnings from one firm lifted the Nasdaq for a second consecutive day. On Thursday, the tech-heavy index got a boost from strong quarterly earnings from software firm Oracle. Friday's gains were sparked by Research In Motion (RIM), which doubled its third-quarter results from 2007. RIM shares were up $11.37, or 10.63 percent to $118.36.

In economic news, a report released by the Commerce Department said personal consumption climbed 1.1 percent compared to October, implying that the economy may slow down as much as many analysts had feared. The increase was the highest rate since a 1.2 percent gain in May 2004.

October spending rose an upwardly revised 0.4 percent, higher than analysts' estimates of an 0.2 percent gain.