The S&P 500 rose 2.4 percent, its biggest one-day jump since June 2020, while the technology-heavy Nasdaq composite rose 3.1 percent.
Economists are virtually certain that the central bank will start increasing interest rates in March, but the question now is by how much and how often will it do so.
The Employment Cost Index, a measure of wages and salaries in the United States that is closely watched by the Fed, rose 1 percent in the three months ending in December compared with the prior quarter, the government said.
Apple also gave markets a big lift after reporting a record profit of $34.6 billion in the last three months of 2021 on Thursday.
Apple’s better-than-expected quarter could ease fears that the tech industry’s long period of fast growth may be coming to an end, and shares of some other big technology stocks — which led the stock market sell-off this month — also climbed.
Separately, Visa rallied 10.6 percent and was the best-performing stock in the S&P 500 after it reported that payment volumes jumped 20 percent in the final three months of the year.
That’s not to say that Wall Street’s biggest concerns have suddenly evaporated.
On Thursday, for example, shares of the electric vehicle maker Tesla slid more than 11 percent, weighing on the broader S&P 500, after the company said supply chain problems would put a constraint on production in the coming year.
The rapid spread of the Omicron variant, persistent inflation and the increased market volatility were some of the reasons consumers were less upbeat about the economy, the university said.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today.
Where is inflation headed? Officials say they do not yet see evidence that rapid inflation is turning into a permanent feature of the economic landscape, even as prices rise very quickly.
“With inflation sky high and the Fed potentially looking to hike rates four times across the year, if not more, the markets fear that the U.S.
Though the broader S&P 500 has fared better, in large part because a rally in oil prices has lifted shares of energy companies, it remains close to a critical threshold: a drop of 10 percent from its last record, which on Wall Street is called a correction.
The Nasdaq composite is already in a correction, however, and is down 14 percent from its record, which it reached in November.