The S&P 500 gained 0.7% on Friday, capping its best quarter since 2009 amid a risk-on sentiment and continued trade optimism. Friday's advance propped the S&P 500 to a gain of 13.1% this quarter.

The Dow Jones Industrial Average (+0.8%), the Nasdaq Composite (+0.8%), and the Russell 2000 (+0.3%) extended their quarterly gains to 11.2%, 16.5%, and 14.2%, respectively.

The S&P 500 health care (+1.2%), industrials (+1.0%), and information technology (+1.0%) sectors outperformed the broader market. Conversely, the energy (-0.2%) and real estate (-0.1%) sectors were the lone groups to finish with losses.

The market liked to hear that the U.S. and China held "constructive" trade talks in Beijing this week, according to Treasury Secretary Steven Mnuchin and the White House. Trade talks will continue next week in Washington with China's Vice Premier Liu He.

The market also liked to hear NEC Director Larry Kudlow saying he believes the Fed should cut rates by 50 basis points since there is no inflation and the U.S. economy is fundamentally healthy. Mr. Kudlow's comments came after Fed Governor Randal Quarles said further rate hikes may be necessary, as he remains optimistic about economic growth.

Lyft (LYFT 78.29, +6.29, +8.7%) was the stock of the day after the company made its highly-anticipated market debut on the Nasdaq, opening at $87.24 after its IPO priced at $72.00 per share.

In other key corporate news, several proxy firms came out in support for Celgene's (CELG 94.34, +6.89, +7.9%) proposed merger with Bristol-Myers (BMY 47.71, -0.13, -0.3%), prompting Starboard Value to withdraw its proxy solicitation. Starboard remains opposed to the deal, though.

U.S. Treasuries ended the week on a lower note, sending yields higher across the curve. The 2-yr yield increased four basis points to 2.27%, and the 10-yr yield increased three basis points to 2.41%. The U.S. Dollar Index increased 0.1% to 97.27.

Reviewing Friday's economic data, which included Personal Income for February, Personal Spending for January, the Core PCE Price Index for January, New Home Sales for February, and the revised University of Michigan Index of Consumer Sentiment for March:

• Personal income increased 0.2% in February (Briefing.com consensus 0.3%) after decreasing 0.1% in January. Personal spending increased 0.1% in January (Briefing.com consensus 0.3%) after decreasing a revised 0.6% (from -0.5%) in December. 
• The PCE Price Index for January decreased 0.1% while the core PCE Price Index, which excludes food and energy, increased 0.1% (Briefing.com consensus 0.2%). On a year-over-year basis, the PCE Price Index is up 1.4%, down from 1.8% in December, and the core PCE Price Index is up 1.8%, down from 2.0% in December.
  • The key takeaway from the report is that the core PCE Price Index slipped below the Fed's longer-run inflation target of 2.0%, which can be used by the FOMC as a reason for maintaining its newfound patient stance.
• New home sales increased 4.9% m/m in February to a seasonally adjusted annual rate of 667,000 (Briefing.com consensus 618,000) from an upwardly revised 636,000 (from 607,000) in January. On a y/y basis, new home sales were up 0.6%.
  • The key takeaway from the report is that a recent decrease in prices appears to have invited more sales activity.
• The final University of Michigan Index of Consumer Sentiment for March increased to 98.4 (Briefing.com consensus 97.8) from 97.8 in the preliminary reading.
  • The key takeaway from the report is that a large share of households reported rising incomes and lower expected year-ahead inflation rates, leading to increased real income expectations.
• The Chicago PMI increased to 58.7 in March from 64.7 in February.

Looking ahead, investors will receive Retail Sales for February, the ISM Manufacturing Index for March, Business Inventories for January, Construction Spending for February, and auto and truck sales throughout the day on Monday.

• Nasdaq Composite +16.5% YTD
• Russell 2000 +14.2% YTD
• S&P 500 +13.1% YTD
• Dow Jones Industrial Average +11.2% YTD