A reassuring PCE inflation report and soothing words from a Federal Reserve official lifted equities across the board Friday to recover some of Wednesday's losses. The Dow gained 1.2 percent while the S&P 500 rose 1.1 percent and the Nasdaq was up 1.0 percent. US Treasury yields and the dollar slipped after the inflation report. Oil prices edged up but ended lower on the week.

News that total and core PCE prices rose by 0.1 percent on the month reassured investors that inflation is ebbing as hoped in the Fed's preferred inflation barometer. And risk assets also reacted favorably to Chicago Fed President Austin Goolsbee's comment that inflation has been close to target and that rates are headed a fair bit lower in 2025. Markets were watching talks on Capitol Hill to head off a government shutdown.

Among sectors, best were health care, real estate, financials, information technology and industrials. Nvidia led technology shares higher and United Health lifted health care. The health insurer has seen dip-buying after selling off since one of its executives was killed on Dec. 4.

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.