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NEW YORK (AP) --
Stocks are rallying Friday, as Wall Street closes out a winning March and first quarter of the year despite a long list of worries for investors.
The S&P 500 was 1.1% higher in afternoon trading. It's on pace for a 3.1% gain for the month and a second winning quarter in a row after tumbling through most of last year on worries about high interest rates meant to get inflation under control.
The Dow Jones Industrial Average was up 325 points, or 1%, at 33,185, as of 3:05 p.m. Eastern time, while the Nasdaq composite was 1.4% higher.
Friday's gains came after a report showed inflation across the United States slowed in February, though it was still high relative to history. A continued slowdown could give the Federal Reserve more leeway to take it easier on interest rates after jacking them higher at a furious pace over the last year.
The threat of higher rates has been behind the stock market's struggles since it peaked in early 2022. High rates can undercut inflation but only by bluntly slowing the entire economy, which raises the risk of a recession. They also drag down prices for stocks, bonds and other investments.
A blitz of economic reports earlier in the year suggesting stubbornly high inflation raised worries the Fed would have to keep rates even higher than feared for longer.
A recession still hasn't hit the economy, at least not yet, but the pressure of higher interest rates helped cause the banking industry to crack earlier this month.
The second- and third-largest U.S. bank failures in history rocked markets after depositors rushed to pull their money out of Silicon Valley Bank and Signature Bank. The runs pushed investors to cast harsher scrutiny on banks globally in the hunt for seemingly weak links.
Forceful actions by regulators have since helped to rebuild some confidence. Almost as importantly, traders have also built bets that the banking system's woes will force the Fed to stop hiking rates soon and even to begin cutting rates later this year.
The overriding mood in the market seems to be that the "Fed blinked and off we rally into April" before waiting to see if a recession or new panics around commercial real estate or something else awaits in the second half of the year, investment strategist Michael Hartnett wrote in a BofA Global Research report.