In the week ending Jan. 10, the Dow climbed 0.70 percent, the S&P 500 was up 0.94 percent and the Nasdaq advanced 1.75 percent.
Geopolitical pressure remained high in the past week as the United States and Iran engaged in tit-for-tat military provocations, with many fearing the tensions could spiral into war.
Market concerns over the escalation of tensions in the Middle East were partly eased after President Donald Trump downplayed Iran's missile attack against U.S. forces in Iraq.
Trump said on Wednesday that no casualties were resulted from Iran's missile strikes in Iraq on Tuesday, sending signals of de-escalation while threatening Tehran with fresh sanctions.
"No Americans were harmed in last night's attack by the Iranian regime. We suffered no casualties," Trump said in a televised address after Iran launched more than a dozen ballistic missiles at Iraqi bases housing U.S. troops.
The president also showed his restraint in his remarks, saying that "Iran appears to be standing down," which is "a good thing" for all parties concerned.
A U.S. drone struck a convoy at Baghdad International Airport last Friday, killing Iranian Major General Qassem Soleimani, sparking outrage and revenge threats from Tehran.
Wall Street rallied after Trump's remarks, with all the three major indexes to set new records on Friday morning, as traders shrugged off Iran tensions.
The Dow had briefly traded above the 29,000 milestone for the first time to reach an all-time high at 29,009.07 in the morning session. The S&P 500 and the Nasdaq also hit record highs in intraday trading before turning negative.
"By week's end, the pressure had subsided, but the situation remains on high alert as outcomes in geopolitics - particularly ones that involve Iran - tend to be unpredictable," analysts at stock research firm Zacks Investment Research said in a note on Saturday.
While continuing to weigh geopolitical risks, market participants also pored through economic data concerning fundamentals.
U.S. employers added 145,000 jobs in December, down from revised 256,000 in November, and the unemployment rate remained at 3.5 percent, the U.S. Bureau of Labor Statistics reported Friday.
Notable job gains occurred in retail trade and health care, while mining lost jobs, according to the report. The increase in new jobs fell short of the 165,000 MarketWatch forecast.
In the week ending Jan. 4, U.S. initial jobless claims, a rough way to measure layoffs, came in at 214,000, a decrease of 9,000 from the previous week's revised level, the Labor Department said on Thursday.
U.S. non-manufacturing index rose to 55 percent in December from the November reading of 53.9 percent, according to the Institute for Supply Management on Tuesday. Numbers over 50 percent are viewed as positive for the economy.
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