Equities advanced Friday as November's rally carried over into December as many investors see a goldilocks economy. The Dow Jones industrial average gained 0.8 percent and the S&P 500 and the Nasdaq both firmed 0.6 percent. The dollar rose while oil prices and US Treasury yields dropped.

Federal Reserve Chair Jerome Powell appeared to push back against market expectations for near-term rate cuts in comments Friday, but investors took his remarks as confirmation that no more rate increases are likely. The CME Fed funds tool shows rising expectations for a rate cut in May. Meanwhile, signs of progressive disinflation and slowing in the economy have been welcomed as evidence that a soft landing is under way.

Bond yields declined Friday after another batch of relatively weak US purchasing managers figures after Thursday's pleasing personal income and spending report and jobless claims. Lower interest rates were generally supportive to risk appetite, although megacaps had an off day to restrain the major averages. Many traders appear to be buying into the notion that equities are headed higher into year end, and don't want to miss out.

Best sectors included consumer discretionary, financials, materials, energy, and real estate, while communications services lagged.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.