Wall Street Rallies on Cooler Inflation and Eased Rate Fears

Wall Street indices soared on Friday following a cooler-than-expected inflation report, calming fears over the Federal Reserve's rate forecasts. Treasury yields dipped and traders adjusted their 2025 rate cut expectations. Despite market rally, concerns over Fed's policy and political uncertainties remain.

In a dramatic turn of events on Friday, Wall Street's major indices surged as an unexpected dip in inflation alleviated some of the market's anxieties over the Federal Reserve's recent forecasts, which included only two rate cuts for 2025.

The retreat in Treasury yields from over six-and-a-half-year highs played a crucial role in aiding the U.S. stock market's reversal after a shaky start. Latest figures showed the Personal Consumption Expenditure index increase by 2.4% annually for November, compared to expected 2.5%, according to a Reuters poll.

Traders adjusted their expectations for rate cuts due in 2025, now anticipating the first cut in March and second by October. Despite Friday's upbeat results, the central bank's hawkish stance continued to loom over the markets.

(With inputs from agencies.)