Stocks rose modestly on Friday, leaving Wall Street higher for the week higher after five sessions dominated by a handful of high profile takeovers and mixed economic news.

The Dow Jones Industrial Average rose fractionally to 10,542.55. The S&P 500 crept up 1.16 points, or 0.1 per cent, to 1,198.78, and the Nasdaq Composite was 4.49 points, or 0.2 per cent, higher at 2,075.73.

The Dow rose 0.7 per cent for the week. The S&P climbed 0.8 per cent and the Nasdaq finished up 1.4 per cent for its fourth successive week of gains.

Chris Johnson, director of quantitative analysis at Schaeffer’s Investment Research, said improved sentiment had helped markets break through some important technical trading barriers in recent sessions, but warned that the rally was likely to be short-lived.

“I think this is going to be something that the traders can take advantage of, but regular investors might be left scratching their heads if they buy into this rally,” Mr Johnson said.

With the corporate earnings season all but over, economic news emerged as the main driver of market sentiment in a week punctuated by news of big takeover deals in the appliances and power sectors.

As usual, the week’s raft of economic data provided fodder for bulls and bears alike, and yielded few insights into the prospects for corporate earnings growth and inflation in the months ahead.

Intel and Apple Computer stole the show on Monday amid reports that the companies were in talks to use Intel chips in Apple’s Macintosh computers. Shares in Intel, which is the world’s biggest chipmaker, rose 3.9 per cent for the week.

Apple shares, which were among the stock market’s best performers last year, rose 8 per cent amid speculation that an Intel deal could make Apple’s computers less expensive as the computer group targets the market share commanded by personal computer rivals.

Energy stocks notched up the day’s best performance as the price of crude oil rose – a trend that continued during the week. Shares in Exxon Mobil, the biggest US refiner, rose 5.2 per cent on the week to $56.80.

Stocks were little changed on Tuesday after minutes from the May 3 meeting of the US Federal Reserve revealed that some policy-makers at the US central bank were concerned about rising inflation and the risk of an economic slowdown. Semiconductors were the biggest gainers of the day, and energy groups continued to climb after MidAmerican Energy Holdings, a power company controlled by Warren Buffett, announced a $9.1bn acquisition of Pacificorp, a power company in the northwest US.

Shares in Berkshire Hathaway, Mr Buffett’s investment group, ended the week higher after rising 2.4 per cent on news of the deal.

Another rise in oil prices and increased signs of investor pessimism on Wednesday outweighed a report that showed a bigger than expected rise in durable goods orders last month. Maytag, the appliance maker that has agreed to a $14-a-share takeover offer by a private equity group, fell 2.7 per cent on Wednesday and 5.8 per cent for the week to $14.50. The shares had risen up to 10 per cent above the $14 offer price in anticipation of a possible counter-bid.

American International Group boosted the Dow on Thursday, as shares rose 3 per cent on news that Eliot Spitzer, New York State attorney general, had launched a suit against the company and two former executives. Shares in the top US insurer ended the week up 4.9 per cent.

On Friday, Pfizer and received unwelcome attention after reports emerged that its Viagra impotence drug may cause blindness in men. Pfizer said it was in talks with the US Food and Drug Administration about changing the drug’s warning label to “reflect these rare ocular events that have occurred”. Shares in the drugs group fell 1.9 per cent yesterday and 0.6 per cent for the week.

Eli Lilly fell 0.1 per cent as blindness concerns emerged over Cialis, a rival impotence drug.

TiVo, the maker of digital television recorders, rose 27 per cent for the week after earnings beat expectations.