The stock market recovered on Friday, reversing its earlier steep losses from the week, as the final major inflation report of the year came in cooler than anticipated.
The Dow Jones Industrial Average surged 499 points (1.2%), while the S&P 500 and Nasdaq Composite rose 1.1% and 1%, respectively. Although stocks opened lower, they rallied throughout the morning, with all three indexes closing in positive territory despite some late-session volatility.
A majority of S&P 500 stocks closed higher for the first time in December, snapping a 14-day streak of negative breadth—the longest since 2000. Every S&P 500 sector posted gains, marking the first sector-wide increase since Election Day.
Trading volumes soared, with 21.67 billion shares exchanging hands across major U.S. exchanges—the highest since the meme stock frenzy of January 2021.
Bond yields also fell, with the 2-year Treasury yield dipping to 4.31% and the 10-year yield settling at 4.52%. Meanwhile, the personal consumption expenditures (PCE) price index rose by only 0.1% in November and 2.4% annually, both slightly below expectations. This alleviated concerns about inflation, which had spooked markets earlier in the week after the Federal Reserve signaled worries about persistent price pressures.
Friday was also a “triple witching day,” where the expiration of stock options, index futures, and index options added to market fluctuations. Investors now enter two holiday-shortened weeks, cautiously optimistic after rebounding from the Fed-driven slide.