Market Rally as Inflation Cools, Despite Shutdown Concerns

Wall Street surged with all major stock indexes rising as cooler-than-expected inflation data eased concerns. The Federal Reserve's indication of slowing interest rate hikes and potential government shutdown led to short-term market shifts, with equities showing gains despite ongoing political and economic uncertainties.

Wall Street experienced a notable surge on Friday, with all major U.S. stock indexes climbing over 1%. The rally was driven by lower-than-anticipated inflation data, which helped investors overlook threats of a government shutdown and new tariffs proposed by President-elect Donald Trump.

The Commerce Department's report revealed that the PCE price index, favored by the Federal Reserve as a measure of inflation, was cooler than expected. This discovery was welcomed by investors, easing fears of runaway inflation and supporting the Fed's pursuit of its 2% inflation target.

Amidst this economic backdrop, equity markets felt the strain throughout a hectic week dominated by central bank activities. The Federal Reserve's announcement to decelerate interest rate increases reassured some investors, but concerns over a potential government shutdown loomed large after Republican leaders pledged a vote to prevent it.

(With inputs from agencies.)