The Nasdaq Composite added 0.8% to finish at 8,051.34.
The rally came as investors balanced optimism over the possibility that the Federal Reserve may cut interest rates in response to a slowing economy with jitters about the prospects of dimmer corporate profits should a severe slowdown take hold.
Wall Street's main indexes have gained in recent weeks on expectations of a rate cut and hopes of a revival of trade talks between the United States and China.
Oil prices rallied about 1% on fears that a US military attack on Iran that would disrupt flows from the Middle East, which provides more than 20% of the world's oil output.
Those worries continued to fuel demand for bonds.
After Powell's comments, the USA 10-year Treasury yield slipped as low as 1.97 percent, the first time the benchmark has fallen below 2 percent since November 2016.
Banks climbed as long-term bond yields rose, which makes it easier for banks to charge higher interest rates on mortgages and other kind of loans.
The S&P 500 rose 1 point to 2,955.
Tehran had received a message from President Donald Trump, delivered through Oman overnight, warning that a USA attack was imminent but adding he was against war and wanted talks, Iranian officials told Reuters on Friday.
The market's recovery gained momentum this week after the central bank said on Wednesday that it stands ready to cut interest rates.
Trump said on Friday he aborted a military strike on Iran in response to Teheran's downing of a U.S. drone, but the possibility of a USA retaliation pushed crude prices higher and helped lift the energy sector by 0.82 percent.
Trump said he had aborted a military strike on Iran because such a response to Tehran's downing of an unmanned USA surveillance drone would have caused a disproportionate loss of life.
The NASDAQ Composite on Friday fell 19.63 points, or 0.2 percent, to 8,031.71, but surged 3 percent from 7,796.66 on June 14. The drone shooting follows last week's attack on two oil tankers near the Gulf of Oman. Many investors and economists are hopeful about a future rate cut helping the USA stock market.
Benchmark U.S. crude oil lost 24 cents to $56.85 per barrel in electronic trading on the New York Mercantile Exchange, up from its close Thursday of $57.07.
Brent crude oil, the global standard, rose 1.2% to close at $65.20 a barrel.
Shares of American Express rose over 1 per cent, after Bank of America Merrill Lynch gave the financial services provider a "buy" rating, as the leading investment bank remained bullish on the company's brand strength and growth potential. South Korea's Kospi declined 0.3% to 2,125.62 and in Australia, the S&P ASX 200 declined 0.6% to 6,650.80.
The dollar fell to 107.08 Japanese yen from 107.28 yen on Thursday.