Nasdaq, S&P, Dow extend Thursday's stunning rally as risk sentiment improves

A late-session push helped U.S. stocks overcome mixed trading through most of Friday's session and end higher. All three major indices extended their gains from the previous day's remarkable rally that was driven by softer than expected inflation data. A risk-on tone continued as investors bought into technology and growth stocks. Cryptocurrencies were also in focus after beleaguered exchange FTX filed for bankruptcy. The Nasdaq Composite ( COMP.IND ) ended 1.88% higher at 11,323.33 points, adding to its massive jump of 700 points on Thursday. Traders continued to buy into growth stocks, with megacap technology firms rising across the board. The benchmark S&P 500 ( SP500 ) rose 0.92% to close at 3,992.93 points. "We anticipate some corrective weakness in both indices in the next week or two – but we remain bullish on both through year end," Seeking Alpha contributor Alex King of Cestrian Capital Research said. The Dow ( DJI ) managed to eke out gains of 0.10% to end the session at 33,747.86 points. It fell as much as ~1% earlier in the day. The blue-chip index was capped by losses in defensive healthcare stocks . "The Dow has shown exceptional strength and is now threatening to make a new all time high (even with a selloff in key Dow components today, the index is less than 10% from its prior high point) - and we think the S&P and the Nasdaq could do the same in 2023," King added. For the week, all three major averages ended solidly in the green, largely helped by Thursday's massive gains. The Nasdaq added 8.10% , the S&P rose 5.90% and the Dow advanced 4.15% . Of the 11 S&P sectors, six rose, with Energy the top gainer, as crude oil prices surged after China eased some of its tough COVID-19 rules which added to hopes for a demand boost. Aside from Health Care, defensive sectors Utilities and Consumer Staples were the top three losers. The bond market was closed for the Veterans Day holiday following a sharp drop in Treasury yields in the previous session after monthly core CPI came in cooler than anticipated. The inflation data spurred hopes that the Federal Reserve would slow down its aggressive rate-hike path. According to the CME FedWatch tool, markets are now pricing in a 80.6% probability of a 50-basis-point hike rather than a 75-point one at the central bank's policy meeting next month. "It's still a long, long, long path ahead towards anything resembling normal inflation, but with monthly core CPI running at its slowest pace in over a year, investors immediately latched onto hopes that the Fed wouldn't need to be as aggressive in raising rates, leading to a massive surge across all the major asset classes (on Thursday)," Deutsche Bank's Jim Reid said. In economic data on Friday, the University of Michigan's preliminary measure of November consumer sentiment came in lower than anticipated at 54.7 vs. the consensus figure of 59.5 . Inflation expectations ticked up to 5.1%. The FTX saga took another twist on Friday after the cryptocurrency exchange commenced bankruptcy proceedings and its CEO Sam Bankman-Fried stepped down. Crypto markets resumed their selloff , with Bitcoin ( BTC-USD ) down more than 3%. Ethereum ( ETH-USD ) was marginally lower. Among other active movers, Chinese tech stocks ended higher amid the conclusion of the Singles' Day shopping event and broader optimism as Beijing moved to relax its tough COVID-19 policies. Macau casino stocks also rose . Health and pharma stocks fell in sector-wide selling, with UnitedHealth, Merck and Johnson & Johnson the top three percentage losers on the Dow ( DJI ). Cigna and Elevance Health were the top losers on the S&P ( SP500 ). In earnings related news, software company Expensify fell on a disappointing quarterly report. Shares of electric vehicle startup Polestar drove higher after its revenue more than doubled. Pot stocks gained on the back of Aurora Cannabis' results. The third quarter earnings season largely begins to wind down next week , though reports from retail giants such as Walmart, Target and Home Depot will be closely watched for comments around the state of consumer spending and their forecasts for the all-important holiday sales quarter.