Thursday's tech selloff turned out to be just a blip. Wall Street came roaring back Friday after inflation data landed softer than anyone expected, giving traders fresh confidence that interest rate cuts are still on the table this year.
The numbers were encouraging across the board. Annual inflation cooled from 2.7% down to 2.4% in January, undershooting the 2.5% forecast and hitting the lowest level since May 2025. Even better, core inflation, which strips out the volatile food and energy components, eased from 2.7% to 2.5% year over year. That's the lowest core reading since March 2021, which is the kind of progress that gets the Fed's attention.
The market response was swift and decisive, though with an interesting twist: small caps stole the show. The Russell 2000, the go-to benchmark for smaller companies, surged nearly 1.8%, easily outpacing its large-cap counterparts. Smaller companies tend to be more sensitive to interest rate changes since they often carry more debt and benefit more from cheaper borrowing costs, so this outperformance makes sense.
Over in commodities, precious metals had themselves a day. Gold jumped 2%, trading above the $5,000 mark as it fought to finish the week in positive territory. Silver was even more dramatic, rocketing almost 4% higher to top $77 per ounce. When inflation data suggests the Fed might ease up, metals typically catch a bid as inflation hedges and alternative stores of value.
Bitcoin (BTC) joined the party too, rallying 4.6% and positioning itself to snap a four-day losing streak. Crypto has been having a rough week, so this bounce was welcome news for digital asset enthusiasts.
Earnings Winners Take Center Stage
The inflation news created a favorable backdrop, but corporate earnings provided the real fireworks. Applied Materials Inc. (AMAT) absolutely soared, jumping 9% after delivering quarterly results that blew past expectations. The semiconductor equipment maker's performance suggests the chip sector's recovery might have more legs than people thought.
Arista Networks Inc. (ANET) added 6%, while Vertex Pharmaceuticals Inc. (VRTX) climbed 7.2%. Airbnb Inc. (ABNB) gained 4%, and Coinbase Global Inc. (COIN) exploded higher with a 17% surge, likely getting a boost from both its own earnings and the broader crypto rally.
But the day's most spectacular performance belonged to Rivian Automotive Inc. (RIVN), which skyrocketed 27% in what marked the strongest trading session in the electric vehicle maker's history. The company reported a narrower-than-expected quarterly loss, giving investors hope that the path to profitability might be clearing up. For a company that's been burning cash while scaling production, beating loss estimates by a meaningful margin is a big deal.
The winning streak extended to other names too. DexCom Inc. (DXCM) and Roku Inc. (ROKU) each notched 9% gains, while Wynn Resorts Ltd. (WYNN) climbed 5%.
Not Everyone Celebrated
Of course, earnings season always produces some disappointments. Cameco Corp. (CCJ) slipped 3% despite actually beating estimates sharply, proving once again that sometimes beating expectations isn't enough if the forward guidance or market positioning doesn't cooperate.
The real pain hit DraftKings Inc. (DKNG) and Pinterest Inc. (PINS), which tumbled 12% and 18%, respectively. Those are the kind of drops that sting, especially on a day when the broader market was celebrating.
Market Scoreboard
By early afternoon, here's how the major indices stacked up:
The Russell 2000 led the pack with its 1.8% gain to 2,663.79. The Nasdaq 100 added 0.8% to reach 24,894.96, while the S&P 500 climbed 0.7% to 6,879.94. The Dow Jones Industrial Average rose 0.6% to 49,733.76.
Looking at the major ETFs, the picture was similarly positive. The Vanguard S&P 500 ETF rose 0.6% to $630.40, and the SPDR Dow Jones Industrial Average moved 0.5% higher to $497.10. The tech-heavy Invesco QQQ Trust Series gained 0.8% to $605.60, while the iShares Russell 2000 ETF traded up 1.8% at $264.21.
Sector performance showed some interesting divergence. The Utilities Select Sector SPDR Fund outperformed dramatically, surging 2.9%, while the Financial Select Sector SPDR Fund lagged, slipping 0.3%.
Russell 1000's Biggest Movers
Among Russell 1000 components, the top gainers told the story of Friday's momentum. Rivian Automotive Inc. (RIVN) led with its 26.83% explosion, followed by Coinbase Global Inc. (COIN) at 17.04%. Procore Technologies Inc. jumped 11.54%, Fermi Inc. added 11.23%, and HubSpot Inc. rounded out the top five with a 9.55% gain.
On the flip side, the worst performers highlighted some brutal individual stories. Bright Horizons Family Solutions got hammered, dropping 21.32%. Pinterest Inc. (PINS) fell 17.55%, Fortune Brands Innovations declined 15.16%, DraftKings Inc. (DKNG) lost 13.18%, and Ryan Specialty Holdings Inc. dropped 12.46%.
The broader takeaway? Cooler inflation gave the market exactly what it wanted: a reason to believe that rate cuts haven't been taken completely off the table. Small caps responded with enthusiasm, precious metals caught fire, and quality earnings reports provided the fundamental support to turn sentiment positive. After Thursday's tech-led selloff, it was exactly the kind of rebound that keeps traders guessing about what comes next.
