Stocks rallied on Friday for a fifth day and were on track to record their best week in nearly a year, after a surprising jump in manufacturing data eased concerns about a tepid economic recovery.

Consumer discretionary and financial stocks led the day's advance. But trading volume was well below average ahead of the long holiday weekend, with just 2.73 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq.

I'm quite bullish on equities at this point. The main factors that have been weighing on the market are behind us. Worries about a big slowdown in manufacturing have eased and Greece, although temporarily, is gone, said Kurt Karl, chief U.S. economist at Swiss Re in New York.

The Dow Jones industrial average <.DJI> was up 125.93 points, or 1.01 percent, at 12,540.27. The Standard & Poor's 500 Index <.SPX> was up 12.74 points, or 0.96 percent, at 1,333.38. The Nasdaq Composite Index <.IXIC> was up 30.85 points, or 1.11 percent, at 2,804.37.

The pace of growth in manufacturing picked up for the first time in four months, with an index of national factory activity rising to 55.3 in June from 53.5 in May, Institute for Supply Management (ISM) data showed.

The ISM survey built on surprisingly strong regional business data on Thursday.

Friday marks the fifth day of a rally as stocks rebounded from a spate of weakness over the last two months.

Investors focused on the U.S. data, even as the latest overseas data was sobering. Outside the United States, the global manufacturing sector lost steam for a second month running, surveys showed.

The S&P 500 <.SPX> climbed further above resistance at its 50-day moving average at 1,317, establishing another floor in the market after the benchmark index moved above a number of technical resistance levels.

Ford Motor shares rose 1.7 percent to $14.02 after the U.S. automaker said June sales shot up 14 percent.

General Motors shares gained 0.9 percent to $30.64 after the company reported a weaker-than-expected gain in June U.S. sales. But the company sees that tepid growth as temporary, GM's U.S. sales chief Don Johnson told reporters.

Oshkosh Corp shares surged 12.5 percent to $32.55 after Carl Icahn said he wanted to meet with the management of the specialty truck maker to discuss enhancing shareholder value. The billionaire investor owned about 9.5 percent of Oshkosh shares as of June 20.

In contrast to the session's brisk rally, Eastman Kodak Co dropped 14.5 percent to $3.06 after a U.S. trade panel upheld portions of a ruling unfavorable to the company in a patent fight over digital camera technology in cell phones.

(Reporting by Angela Moon; Editing by Jan Paschal)

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