The Dow Jones rises 498 points as stocks recover from the Fed-fueled plunge

• US stocks rose on Friday after tame inflation data and dovish comments from the Fed’s Austan Goolsbee.

• Goolsbee said he expects rates to continue falling over the next 12 to 18 months.

• Investors are keeping a close eye on a possible government shutdown and a major triple whammy for the options market.

U.S. stocks rose on Friday, recouping some of the week’s losses caused by a hawkish Federal Reserve.

The Dow Jones Industrial Average rose nearly 500 points, giving back some of its intraday gains after rising more than 800 points. The Nasdaq Composite and the S&P 500 rose more than 1%.

The market opened lower but reversed course later in the morning. Gains accelerated after Fed President Austan Goolsbee told CNBC he expects rates to fall “quite a bit” over the next 12 to 18 months.

Goolsbee, like the broader market, was encouraged by recent inflation figures, which came in below economists’ expectations.

A drop in bond yields also helped stocks through the day, with 10-year Treasury yields falling four basis points to 4.528%.

The PCE index, the Fed’s preferred inflation measure, rose 0.1% monthly in November, compared with economists’ estimates of 0.2%. On an annual basis, the indicator rose by 2.4%, compared to an expectation of 2.5%.

“We are still on track to reach 2% and at least for this new month you don’t want to make too much on one month, but I am hopeful that this indicates that the few months of strengthening it is more of a bump then a change in rate,” Goolsbee said of the recent inflation data.

Here’s where the US indexes stood as of 4:00 PM on Friday:

Concerns about an impending government shutdown have also caused recent market volatility. Congress has until midnight Friday to approve an agreement to avoid a shutdown.

While Congress had drafted an emergency funding bill a few days ago, newly elected President Donald Trump and Elon Musk torpedoed it, complaining about unnecessary spending measures in the law.

A second attempt to pass a Trump-approved government funding bill failed late Thursday night in the House of Representatives, with a final vote of 174 in favor to 235 against.

House Speaker Mike Johnson has since proposed a new plan that would temporarily keep the government open and fund disaster relief. The bill reportedly has Republican support and will be put to a vote later on Friday.

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