Lingering optimism over a probable rate cut later this month has boosted all three indexes to record high closes ahead of the second quarter reporting season.
All three major indexes have posted record closing highs as firm expectations for an interest-rate cut from the Federal Reserve continued to propel shares while investors awaited next week's kick off of the corporate earnings season.
The S&P 500 closed above the 3,000 level for the first time on Friday, with the industrial, consumer discretionary and materials sectors each posting gains of at least 1 per cent.
In his two-day testimony before congress, Fed chairman Jerome Powell said the US economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war and that the central bank stood ready to "act as appropriate".
"Clearly his messaging was far more directive in terms of what the Fed is going to do at the next meeting than just a vague promise to keep the economic expansion intact," said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. "That has brought the market to new highs."
With expectations for rate cuts in place, the focus is turning to the corporate earnings season as large US banks, including Citigroup and JPMorgan Chase, are set to report next week.
Analysts estimate that S&P 500 companies will report a 0.4 per cent dip in second-quarter earnings, according to Refinitiv IBES data.
The Dow Jones Industrial Average rose 243.95 points, or 0.9 per cent, to 27,332.03; the S&P 500 gained 13.86 points, or 0.46 per cent, to 3,013.77; and the Nasdaq Composite added 48.10 points, or 0.59 per cent, to 8,244.14.
For the week, the S&P 500 rose 0.8 per cent, the Dow added 1.5 per cent and the Nasdaq gained 1 per cent.
Data for US producer prices in June showed the smallest annual increase in producer inflation in nearly 2-1/2 years and a slowdown in underlying producer prices, which suggested that overall inflation could remain moderate for a while.
Ford Motor shares gained 2.65 per cent after the car-maker and Volkswagen said they would join forces to develop autonomous and electric cars.
Johnson & Johnson shares slid 4.1 per cent after Bloomberg reported that the US Justice Department is pursuing a criminal probe into whether the healthcare conglomerate lied about potential cancer risks of its talcum powder.
Johnson & Johnson's slide dragged down the S&P 500 healthcare index, with its 1.2 per cent decline the biggest among S&P 500 sectors.
Illumina shares tumbled 16.1 per cent, the most among S&P 500 companies, after the gene sequencing company's preliminary second-quarter revenue came in below analyst estimates.
Advancing issues outnumbered declining ones on the NYSE by a 2.02-to-1 ratio; on Nasdaq, a 1.43-to-1 ratio favoured advancers.
The S&P 500 posted 50 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 83 new highs and 55 new lows.
Volume on US exchanges was 5.68 billion shares, compared with the 6.71 billion average for the full session over the last 20 trading days.