Wall Street closed sharply higher on Friday, pulled up by tech and discretionary stocks. On the back of high inflation numbers released on Friday, investors are convinced that the Fed would raise interest rates this week. All of the three benchmark indexes ended firmly in the green.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) added 509.19 points, or 1%, to close at 52,573.29. Twenty-four components of the 30-stock index ended in positive territory, while six ended in negative.

The tech-heavy Nasdaq Composite rose 251.31 points, or 1%, to close at 26,333.04.

The S&P 500 gained 65.28 points, or 0.9%, to close at 7,657. Seven of the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) advanced 1.4%, 1.1% and 1.1%, respectively, while the Utilities Select Sector SPDR (XLU) declined 0.3%.

The fear gauge CBOE Volatility Index (VIX) plunged 11.2% to 15.84. A total of 14 billion shares were traded on Friday, lower than the last 20-session average of 14.9 billion. Advancers outnumbered decliners by a 2.1-to-1 ratio on the S&P 500.

Oil Prices Pull Back

Wall Street stocks rallied on Friday, as a retreat in crude oil prices eased concerns that the recent energy shock would intensify inflation and squeeze corporate margins. Brent crude pulled back from its recent four-month high, offering some relief after geopolitical tensions and disruptions around key shipping routes had pushed oil prices sharply higher. The decline helped improve risk appetite, particularly for economically sensitive sectors. Consumer discretionary stocks gained strongly, and technology shares outperformed as investors returned to growth-oriented equities.

Brent crude futures settled at $104.61 a barrel, down $3.02, or 2.8%, while WTI crude ended at $100.05, shedding $2.43, or 2.4%.

Inflation Data Eases Concerns

Another key driver was the latest U.S. inflation report, which showed August consumer prices in line with expectations. The August 2026 Consumer Price Index (CPI) rose 0.4% month over month, matching the Zacks Consensus Estimate. Headline inflation increased 3.4% year over year, also in line with expectations. However, core CPI climbed 0.3% in a month, beating the Zacks Consensus Estimate of 0.2%. Core inflation eased to 2.4% annually, matching the consensus estimate.

Although inflation remained elevated and reinforced expectations for another Federal Reserve rate hike, the absence of a major upside surprise helped calm markets. A moderation in Treasury yields also supported technology stocks, whose valuations are particularly sensitive to borrowing costs. Together, the relatively predictable inflation reading and retreating oil prices encouraged investors to increase exposure to riskier equities, lifting the major indexes.

Consequently, Hewlett Packard Enterprise Company (HPE Quick QuoteHPE - Free Report) and Dell Technologies Inc. (DELL Quick QuoteDELL - Free Report) soared 12.4% and 12%, respectively. Both currently boast a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Economic Data

Per the University of Michigan, preliminary numbers for consumer confidence in September came in at 47.8, lower than the 51.7 reported in August.

Weekly Roundup

For the week, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite slipped 1.6%, 0.8% and 0.7% respectively.

The weekly decline was driven primarily by a sharp rise in oil prices amid escalating Middle East tensions, which heightened inflation concerns and pushed Treasury yields higher. The 10-year yield approached 5%, increasing fears that the Fed could maintain a restrictive stance despite an expected September rate hike. Technology stocks showed relative resilience, helped by strength in AI-related shares, while Friday's retreat in crude and in-line CPI data sparked a broad rebound.