Fed Comments and Cool Inflation Boost U.S. Stocks After Midweek Tumble

U.S. stocks surged on Friday following a subdued midweek performance. A softer inflation report and comments from the Federal Reserve helped allay fears regarding interest rate paths. The S&P 500, Nasdaq, and Dow Jones all closed higher, buoyed by a decline in Treasury yields.

U.S. stocks rallied to end the week strongly on Friday, rebounding from earlier lackluster sessions as a cooler-than-expected inflation report and comments from Federal Reserve officials calmed concerns over interest rates.

The Personal Consumption Expenditure (PCE) index indicated a 2.4% rise in November compared to economist expectations of 2.5%, signaling economic resilience as consumer spending rose. In light of the data, traders adjusted their rate cut forecasts for 2025, anticipating the first to occur in March.

Despite Wednesday's Fed interest-rate cut and economic projections indicating a cautious approach, equities struggled midweek but gained ground on Friday. Major indexes like the S&P 500 and Dow posted significant percentage gains. Furthermore, developments in Congress to avoid a government shutdown were also closely watched.

(With inputs from agencies.)