Investors were on a Fed-induced high this week, pushing stocks to their best levels in several years.
Stocks rallied Friday, albeit more modestly than the surge immediately after the Federal Reserve announced a third round of quantitative easing, or QE3, on Thursday afternoon.
The Dow Jones industrial average, S&P 500, and Nasdaq all posted gains between 1.5 percent and 2.3 percent for the week. The Dow and S&P 500 are at their highest point since the end of 2007 while the Nasdaq hasn't been at this level since late 2000. All three indexes moved up between 0.4 percent and 0.9 percent Friday.
The Fed said Thursday it would buy $40 billion of mortgage-backed bonds each month for however long it deemed necessary. With no end-date in sight for monetary loosening, investors viewed the Fed's moves as the best possible stimulus for the markets.
"The Fed gave us even more than we expected and so much money has been sitting on the sidelines that people are starting to chase performance," said Douglas DePietro, managing director for sales trading at Evercore Partners. "There's some really good support to this rally."
After the Fed announcement, trading volume, which has lackluster overall this year, picked up dramatically, according to several traders.
In yet another sign of investor exuberance, or perhaps even complacency, CNNMoney's Fear & Greed Index hit an all-time high of 94, showing that investors are in 'Extreme Greed' mode.
World markets, which had already closed ahead of the Fed announcement Thursday, joined the rally Friday. European stocks jumped between 1.5 percent and 2 percent. Asian markets ended higher, with the Hang Seng in Hong Kong surging 2.9 percent and Japan's Nikkei gaining 1.8 percent.
The dollar fell to its lowest level since May, as the euro pushed above $1.31.