Risk-on trading continued Friday after Thursday's rally on favorable inflation and AI news with momentum and growth stocks leading. The Dow Jones industrial average firmed 0.4 percent, the S&P 500 gained 0.9 percent and the Nasdaq advanced 1.3 percent. US Treasury yields, the dollar and oil prices all gained.

Big technology shares extended Thursday's gains to lead the market higher. AI chipmaking favorites including Micron, Nvidia and AMD continued Thursday's rally as investors apparently overcame previous fears of a bubble in the sector. Big banks had a good day along with aerospace & defense, biotech, health care, and materials. Lagging were home builders, real estate, parcels & logistics, staples retailers, road & rail, and utilities.

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.