The Dow Jones Industrial Average rallied more than 800 points on Friday, rebounding off the lows of the bear market last week and capping its first weekly advance since May.
The Dow rose 823.32 points, or 2.68%, to 31,500.68, with gains accelerating in the final hour of trading. The S&P 500 was 3.06% higher to 3,911.74. The Nasdaq Composite advanced 3.34% to 11,607.62.
The major averages wrapped up a big comeback week for stocks. The S&P 500 is up nearly 6.5% for the week, while the Nasdaq Composite gained 7.5%. The Dow is 5.4% higher.
Those moves followed the worst weekly decline for the S&P 500 since 2020. Last week, the broader market index closed down 5.8% for the week.
All three major averages snapped three-week losing streaks, as market participants deliberated whether markets have found a bottom. Still, many on Wall Street maintained a gloomy outlook.
"We believe that bounce in U.S. equity markets over the past three trading days has been a bear market rally off deeply oversold conditions," Wolfe Research's Chris Senyek wrote in a Friday note.
"While there may be some additional near-term follow through, we believe that our intermediate-term bearish base case remains intact and that the next leg down is going to be driven by rising recession risks and downward earnings revisions," Senyek added.
The major averages leapt after a consumer sentiment reading that's closely followed by the Federal Reserve showed a slight easing of inflation expectations.
Consumer sentiment hit a record low reading of 50 in June, according to the final reading from a University of Michigan survey released Friday morning. While on the surface that is not positive for the market, investors liked a figure inside the report which showed 12-month inflation expectations by consumers easing back to 5.3%.
A preliminary reading earlier this month that was pivotal in influencing the Fed to get more aggressive with its rate hike showed inflation expectations at 5.4%.
"On balance, sentiment is mixed," wrote Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "Consumers are getting out and paying for 'experiences,' namely travel, leisure, beauty items, household essentials, etc. Elevated inflation, particularly higher food and energy costs, are among headwinds widely expected to crimp discretionary spending in the near-term."
The rally was broad-based: All 11 sectors were up for the day.
Cruise line stocks led the S&P 500 gains. Shares of Carnival Corporation rallied 12.4% after booking volumes in its most recent quarter were "nearly double" the first quarter, meaning it saw the "best quarterly booking volumes since the beginning of the pandemic."
Royal Caribbean Group surged about 15.8%. Norwegian Cruise Line Holdings' shares gained nearly 15.4%.
The financials sector was a notable gainer in the broader market index, up 3.8%. Shares of several of the nation's largest banks climbed after the Federal Reserve released the results of its annual "stress test." The central bank said companies such as Wells Fargo have strong pools of capital to weather a severe recession.
Wells Fargo's stock price jumped nearly 7.6%. Capital One popped 5.6%.
Shares of FedEx surged about 7.2% despite a mixed fourth-quarter report after the logistics company delivered an upbeat earnings forecast.