Stocks jump for 2nd day, fueled by inflation optimism

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STORY: U.S. stocks ended higher on Friday, extending a rally after a cooler-than-expected inflation reading raised hopes the Federal Reserve would get less aggressive with interest rate hikes.

The Dow rose fractionally. The S&P 500 added nearly a percent, while the Nasdaq posted a near 2% gain.

Kevin Nicholson, global fixed income chief investment officer at Riverfront Investment Group, said it was interest rate-sensitive tech stocks that fueled Friday's gains.

"The Nasdaq is rallying right now, largely because we saw interest rates come down. Yesterday, we had the 10-year Treasury move roughly 30 basis points yesterday. And with the bond market being closed today, I think that you're getting some continued acceleration as it pertains to technology because it is a long duration asset. And as interest rates come down, long duration assets tend to do better. And that's why you're seeing technology outperform the rest of the market."

The Nasdaq is still down more than 27% percent this year and the S&P 500 remains down about 16% year to date, on course for its biggest annual decline since 2008.

Amazon jumped more than 4% Friday, with Apple and Microsoft also making gains and contributing to the Nasdaq's strong gain.

U.S.-listed shares of Chinese companies including JD.com and stocks with a high exposure to China such as Wynn Resorts jumped, after Beijing lifted some of its strict health restrictions.

But shares of crypto and blockchain-related stocks fell, after cryptocurrency exchange FTX said it would start U.S. bankruptcy proceedings and that CEO Sam Bankman-Fried would resign, leaving investors questioning the viability of the risky sector already bruised by the bitcoin bubble bursting.