NEW YORK (AP) 鈥� Wall Street rallied following encouraging reports on inflation and on profits at 3M and other big U.S. companies. The S&P 500 rose 1.1% for its best day in seven weeks. The Dow Jones Industrial Average jumped 1.6%, and the Nasdaq composite climbed 1%. The market鈥檚 widespread gains included rallies for both Big Tech behemoths and smaller stocks, a departure from much of this month鈥檚 trading where a divide deepened between the two groups. The Russell 2000 index of small stocks brought its gain for July to more than 10%. Treasury yields eased after the latest inflation data firmed expectations for coming cuts to interest rates.
THIS IS A BREAKING NEWS UPDATE. AP鈥檚 earlier story follows below.
NEW YORK (AP) 鈥� U.S. stocks are rallying in near unison on Friday as they close out a bumpy week that had been dominated by sharp, market-cleaving swings.
The S&P 500 was 1.3% higher in afternoon trading following stronger-than-expected profit reports from 3M and several other big companies. The Dow Jones Industrial Average was up 718 points, or 1.8%, as of 2:12 p.m. Eastern time, and the Nasdaq composite was 1.2% higher.
The market鈥檚 gains were widespread, including both and . That鈥檚 a departure from much of the week, where a divide deepened between the handful of elite stocks that had dominated the market earlier this year and almost everyone else.
rose 1.2% to cut into what had been a 4.8% loss for the week. Most of the other members of the small group of stocks known as the 鈥淢agnificent Seven鈥� also rose to claw back some of their losses from earlier in the week.
They were under pressure after the latest profit results from and raised worries that investors had gotten carried away by the technology and taken Magnificent Seven prices too high.
As those old leaders of the market鈥檚 leaderboard tumbled, formerly downtrodden areas of the market turned higher, and they continued their momentum Friday. The Russell 2000 index of smaller stocks climbed 1.4%. It鈥檚 up more than 10% this month, far better than the slight dip for the big stocks in the S&P 500.
Industrial companies and other businesses whose profits are closely tied to the strength of the economy also rallied. They had lagged this year as high interest weighed on the U.S. economy and slowed its growth.
Norfolk Southern jumped 11.1% to erase what had been a loss for the year so far after the rail company reported better profit for the latest quarter than analysts expected. It from insurance payments related to last year鈥檚 . The company also made progress in reducing its expenses and improving efficiency.
3M rose 21.3% after reporting stronger profit and revenue for the latest quarter than analysts expected. The company behind the Scotch-Brite and Nexcare brands also raised the bottom end of its forecasted range for profit for the full year of 2024.
Stocks generally got another boost from the latest update on , which investors saw as further evidence their expectations for coming cuts to will prove true.
U.S. consumers paid prices in June that were 2.5% higher than a year earlier, down from May's inflation rate of 2.6%, the Commerce Department said on Friday. That's according to the personal consumption expenditures index, which the Federal Reserve pays more attention to than the consumer price index, or CPI.
With inflation resuming its slowdown following a discouraging start to the year, traders are continuing to bet on a 100% probability that the Fed will begin easing its main interest rate in September, according to data from CME Group. The Fed has been keeping its federal funds rate at the highest level in more than two decades for roughly a year.
鈥淚ncome growth is slow, spending growth is moderating, goods prices are in deflation, service price inflation is tame," according to Brian Jacobsen, chief economist at Annex Wealth Management. "If this doesn鈥檛 give the Fed confidence to cut, nothing will.鈥�
The yield on the 10-year Treasury fell to 4.20% following the inflation report from 4.25% late Thursday and from 4.70% in April. That's a significant move for the bond market and offers support for stock prices.
Among the other winners on Wall Street, where nearly 90% of the stocks in the S&P 500 were rising, Deckers Outdoors climbed 7.7% after it breezed past Wall Street鈥檚 earnings expectations on the strength of its Ugg and Hoka brand footwear. The California company also raised its full-year profit forecast.
Newell Brands soared 38.6% after the owner of Coleman camping supplies and Sharpie markers easily topped analysts鈥� profit targets.
Among the relatively few stocks to drop was DexCom, which tumbled 41.2%. The diabetes care company reported stronger profit for the latest quarter than expected, but its revenue fell short of analysts' expectations. So did its forecast for revenue in the current quarter.
In stock markets abroad, stock indexes were higher across much of Europe and Asia. Japan's Nikkei 225 was an outlier and slipped 0.5% amid expectations the Bank of Japan may raise interest rates at a policy meeting next week.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Stan Choe, The Associated Press
