Stocks advanced Friday as markets shifted into risk-on mode as investors looked forward to the Monday start of an expected pro-business Trump administration.

The Dow Jones industrial average rose 0.8 percent, the S&P 500 rose 1.0 percent and the Nasdaq rallied 1.5 percent. US bond yields rose, oil prices declined, while the dollar was mixed.

Stocks improved nearly across the board but megacaps led the way, which means best sectors were technology, consumer discretionary and information services. The market reacted favorably to reports that Trump had held what he called a positive telephone call with Chinese President Xi touching on trade, among other topics. Tesla shares perked up on speculation that Elon Musk would buy TikTok to keep the social media platform going in the US.

Pharma and real estate lagged, with drug stocks hit by news that more drugs would be subject to Medicare negotiations to lower prices. Bitcoin and crypto shares rallied as traders put on risk. Chipmakers had a good day along with banks, homebuilders, telecom, machinery and casinos.

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.