US benchmark equity indexes closed higher on Friday as investors seemed optimistic that the government can avoid a shutdown.

The Nasdaq Composite rose 2.3% to 17,704.9, while the S&P 500 increased 1.9% to 5,624.7. The Dow Jones Industrial Average was up 1.5% to 41,409.4. All sectors were higher with technology and energy posting the biggest gains.

US Treasury yields were higher with the 10-year rate gaining about 4.4 basis points to 4.3% and the two-year rate up 5 basis points to 4%.

April West Texas Intermediate crude oil increased 0.9% to $67.16 a barrel Friday.

"The market appears optimistic the US government can avoid a shutdown (Friday night) after Senate Democratic Leader Chuck Schumer reportedly dropped his objection yesterday to the latest spending bill proposal," Stifel said in a note.

In economic news, US consumer sentiment dropped to 57.9 in March from 64.7 last month, preliminary results from a survey by the University of Michigan showed. A Bloomberg-compiled survey expected 63.

Year-ahead inflation expectations increased to 4.9% in March-- the highest reading since November 2022 -- from 4.3% in the previous month. Price growth over the next five years is pegged at 3.9%, compared with 3.5% in February.

In company news, Ulta Beauty (ULTA) was the top gainer on the S&P 500 with shares up nearly 14%. Although the beauty retailer's full-year guidance missed Wall Street's estimates late Thursday, it showed potential for positive earnings revisions in the coming quarters, UBS said.

Crown Castle (CCI) was up 10%. The company has agreed to sell its small cells and fiber solutions businesses for a combined $8.5 billion to separate buyers after a strategic review.

KKR (KKR) shares gained 4.2%. KKR and Stonepeak Partners' deadline for a firm offer to buy UK-based real estate investment trust Assura was extended to April 11, Assura said.

Rubrik (RBRK) shares jumped 27%, a day after the company reported fiscal Q4 results and guidance for fiscal Q1 and the full year that beat market expectations.

Abbott Laboratories (ABT) shares were down 2.5% after a state appeals judge in Missouri ordered a retrial of a civil lawsuit related to its formula milk.

Gold gained 0.1% to $2,993 per troy ounce, while silver was flat at $34.32.