U.S. stocks gained surer footing after a choppy morning session, extending a rally sparked by a slowdown in inflation. The dollar fell, declining for a fourth week.

The S&P 500 closed near session highs in the biggest weekly gain since June. The tech-heavy Nasdaq 100 climbed more than 1.5 per cent, notching its best week in two years. Cash Treasury trading is closed for Veterans Day.

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Elsewhere, China easing some Covid restrictions helped underpin risk sentiment Friday, with U.S.-listed Chinese stocks rising along with commodities from oil to soybeans to precious metals.

Meanwhile, cryptocurrencies resumed a selloff amid FTX’s deepening woes with Sam Bankman-Fried’s crypto empire filing for bankruptcy. While that news weighed on sentiment in early trading, investors downplayed contagion risks. 

“From my vantage point, the real-world impact seems somewhat limited,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors LLC. “It’s hard to imagine how it has a big impact on the overall economy. Crypto makes up a relatively small portion of financial markets, financial transaction, jobs, consumer spending, business spending, etc.”

U.S. stocks soared the most since 2020 on Thursday after a better-than-forecast cooling in U.S. inflation improved prospects of a dovish tilt by the Federal Reserve. On Friday, the University of Michigan’s preliminary November survey showed U.S. consumer inflation expectations increased in the short and long run while sentiment retreated. 

Boston Fed President Susan Collins said that the risks of going too far have risen after a string of jumbo-sized rate hikes, but noted a smaller, more “deliberate” increase should not be confused with backing down from curbing price pressures.

“The moderation in the pace of inflation is a welcome development, while it is still far too early to declare the inflation threat over,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote. “We still think the Fed is likely to raise at least another 100 basis points in total before it pauses the rate hiking cycle.”

While markets reacted positively to the inflation print Thursday, Credit Suisse strategists led by Jonathan Golub said the rally was “out of sync with the size of the surprise.” This, they note, follows a pattern of outsize responses to CPI prints, which has averaged 2.8 per cent on the day in the past seven releases.

The dollar slumped more than 1 per cent on Friday in the biggest weekly drop since the pandemic-fueled volatility in March 2020. 

Bitcoin dropped as much as 8 per cent to US$16,376 and Ether fell as much as 9.2 per cent. FTX.com’s bankruptcy filing capped a swift reversal of fortune for the crypto exchange led by Bankman-Fried.

Pinduoduo Inc. and JD.com Inc. jumped in US trading amid growing optimism Beijing is on its way to ending the crippling Covid Zero policy. China reduced the amount of time travelers and close contacts must spend in quarantine. 

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.9 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 1.8 per cent
• The Dow Jones Industrial Average rose 0.1 per cent
• The MSCI World index rose 1.9 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 1.3 per cent
• The euro rose 1.4 per cent to US$1.0357
• The British pound rose 1.1 per cent to US$1.1845
• The Japanese yen rose 1.6 per cent to 138.68 per dollar

Cryptocurrencies

• Bitcoin fell 6.7 per cent to US$16,606.42
• Ether fell 5.8 per cent to US$1,244.44

Bonds

• The yield on 10-year Treasuries was little changed at 3.81 per cent
• Germany’s 10-year yield advanced 15 basis points to 2.16 per cent
• Britain’s 10-year yield advanced seven basis points to 3.36 per cent

Commodities

• West Texas Intermediate crude rose 2.9 per cent to US$88.94 a barrel
• Gold futures rose 1 per cent to US$1,770.50 an ounce