At the close of U.S. trading, the Dow Jones Industrial Average ended up 1.46%, the S&P 500 index was up 1.91% while the Nasdaq Composite index was up 2.24%.
European indices, meanwhile, finished up. After the close of European trade, the EURO STOXX 50 rose 2.23%, France's CAC 40 rose 2.28%, while Germany's DAX 30 finished up 1.62%. Meanwhile, in the U.K. the FTSE 100 rose 0.97%.
Stocks took off at the end of the week, drawn by the allure of a helping hand from the world's two most powerful central banks. Traders are unlikely to resist those charms again next week.
The US Federal Reserve and the European Central Bank both meet next week amid investor expectations of action to stimulate economic growth and, in the case of the ECB, tackle the spreading euro zone debt crisis.
The drumbeat of weak economic data and disappointing US corporate profits and outlooks mean central banks can be stocks' best friends.
Equity prices tend to rise sharply in the hours before a Fed statement like the one expected on Wednesday as traders and investors jockey for position and a chance to make a profit.
Next week's calendar has a double-whammy. The Fed's monetary policy statement will come one day before an ECB meeting packed with intrigue. ECB President Mario Draghi said earlier this week the bank was ready to do whatever was necessary, within its mandate, to save the euro.
The focus on central bank meetings will get in the way of a heavy week of earnings for S&P 500 companies at a time when the outlook continues to worsen. Major companies due to report include AIG Read Companies Earning report week july 30-august 3 2012
Financial markets will be waiting with bated breath to see if the European Central Bank announces any new policy moves next week, but analysts warned they could be disappointed.
ECB chief Mario Draghi sent stock markets soaring and helped bring down Spanish borrowing costs sharply last week when he said the central bank was "ready to do whatever it takes to preserve the euro. And believe me it will be enough."
Since the start of the crisis, the ECB lost no time in embarking on a series of emergency measures -- in addition to cutting rates -- to stem the turmoil.
Indeed, the bank is seen by many as the sole institution in Europe capable of acting quickly and effectively enough to extinguish the crisis fires.
The ECB has brought eurozone borrowing costs down to a new all-time low of 0.75 percent and embarked on a hotly contested programme of buying up the bonds of debt-mired countries, known as the SMP.
On top of this, the ECB also pumped more than 1.0 trillion euros ($1.2 trillion) into the banking system and relaxed the criteria for collateral that banks need to put up to take out loans from the central bank.
Nevertheless, as the borrowing price, or yield, on Spanish debt recently climbed to levels at which other eurozone countries had to ask for international bailouts, the central bank found itself under pressure to act yet again.
Draghi's comments were interpreted as a signal that the ECB might do so by resuming the SMP programme which has lain dormant for most of this year.
And in the wake of his remarks, the yield on 10-year Spanish bonds dropped, European stock markets jumped and the euro spiked higher against the dollar.
Nevertheless, when the ECB's governing council convenes for its regular monthly policy meeting on Thursday, central bank watchers were sceptical as to whether Draghi would really deliver
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