Stocks close with best weekly gains of the year

• Factory output dropped in January
• Jos.A. Bank is buying Eddie Bauer
• Inflation steady in China

Stocks closed higher Friday as the market's recent rally helped cap off the biggest weekly gains of the year.

The Dow Jones industrial average rose 126.80 points, or 0.8%, to 16,154.39 and the Standard & Poor's 500 index rose 8.80 points, or 0.5%, to 1,838.63.

The Dow and S&P 500 have risen six of the past seven sessions. Both indexes rose 2.3% for the week.

The Nasdaq composite index rose for the seventh straight session, gaining 3.35 points, or 0.1% to 4,244.03. The tech-laden index jumped 2.9% for the week.

In earnings news Friday, shares of Campbell Soup rose 5% to $43.01 after the company reported that its second-quarter profit and revenue came in above Wall Street's expectations.

Weight Watchers International plunged 27.7% to $22.10 after reporting a big drop in earnings that was worse than analysts' had been forecasting. The company also issued a weak earnings forecast for this year.

Men's Wearhouse dropped 5.3% to $44.07 after Jos. A. Bank Clothiers, which Men's Wearhouse had been pursuing, announced a deal of its own. Jos. A. Bank said Friday it has agreed to buy Eddie Bauer for $827 million. Jos. A. Bank shares were up 0.4% to $55.12.

In economic news, investors were disappointed by a steep drop in U.S. factory output in January. The Federal Reserve says factory production plunged 0.8%.

The yield on the 10-year Treasury note rose to 2.74% from 2.73% Thursday.

Benchmark U.S. crude for March delivery was down 7 cents at $100.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract eased 2 cents to close at $100.35 on Thursday.

Thursday, stocks rose despite disappointing economic data. A report showed that cold weather caused U.S. retail sales to drop in January for a second straight month as Americans spent less on autos and clothing and at restaurants during a brutally cold month. Weekly jobless claims were higher than expected.

The Dow rose 63.65 points, or 0.4% to 16,027.59 and the Standard & Poor's 500 stock index rose 10.57 points, or 0.6% to 1,829.83. The Nasdaq composite was up 39.38, or 0.9% to 4,240.67.

Overseas, European markets were higher. Official figures show the economic recovery across the eurozone accelerated in the fourth quarter of 2013. Eurostat, the European Union's statistics office, said Friday that the eurozone's gross domestic product grew by 0.3% in the October-December quarter compared with the previous three-month period.

Britain's FTSE 100 index was up 0.1%to 6,663.62 and the CAC-40 in France rose 0.6% to 4,340.14. Germany's DAX rose 0.7% to 9,662.40.

China's inflation was steady in January, leaving its government room to stimulate the economy if a slowdown worsens.

China's consumer prices rose 2.5% over a year earlier in January. The rise in politically sensitive food costs decelerated to 3.7% from December's 4.1%.

China's Shanghai composite index rose 0.8% to 2,115.85 and Hong Kong's Hang Seng added 0.6% to 22,298.41. But Japan's Nikkei 225 stock average dropped 1.5% to 14,313.03.

Contributing: Associated Press