U.S. equity markets extended gains Friday following the release of softer-than-expected inflation figures that reinforced investor expectations for near-term interest rate reductions. The Consumer Price Index rose 2.4% year-over-year in January, marking the lowest reading since May 2025, while core inflation—which excludes volatile food and energy components—moderated to 2.5%. The data suggested inflation's continued trajectory toward the Federal Reserve's 2% target, reducing pressure on policymakers to maintain elevated rates.
Small-capitalization stocks led the broader market advance, with the Russell 2000 index gaining 1.8% as investors rotated into economically-sensitive equities positioned to benefit from lower borrowing costs. Commodity markets reflected heightened risk appetite, with precious metals and cryptocurrencies posting significant gains. Gold rose 2% and silver surged 4%, while Bitcoin climbed 4.6% as investors reassessed the outlook for monetary policy.
Sector-specific strength, particularly in technology and growth-oriented companies, contributed to individual stock outperformance. Electric vehicle manufacturer Rivian Automotive surged 27%, while cryptocurrency exchange operator Coinbase jumped 17%, as earnings results and broader sentiment shifts supported these equities. The session underscored how shifts in inflation expectations can catalyze rotations across asset classes and market segments.