Growth stocks lead value as Nasdaq rallies

The S&P 500 and Nasdaq have ended sharply higher, extending a rally started the day before after a soft inflation reading raised hopes the Federal Reserve would get less aggressive with United States interest rate hikes.

Amazon jumped 4.3 per cent, with Apple and Microsoft both up more than 1.0 per cent and contributing to the Nasdaq's gain.

On Thursday, the S&P 500 and the Nasdaq racked up their biggest daily percentage gains in more than two years as annual inflation slipped below 8.0 per cent for the first time in eight months.

Declines in healthcare stocks limited the Dow Jones Industrial Average's gain, with UnitedHealth Group down 4.1 per cent for the day.

"What we're really seeing today is simply a follow-through on yesterday," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

"There's a lot of cash sitting on the sidelines that is being put to work.

"Perhaps it signals some type of bottom being put in the market, some type of line drawn in the sand, but even if we put in a bottom, we're a long way away from setting new highs," he said.

Investors see an 81 per cent chance of a 50-basis point rate hike in December and a 19 per cent chance of a 75-basis point hike, according to CME Fedwatch tool.

Adding some nervousness on Wall Street, crypto exchange FTX said it would start US bankruptcy proceedings and that CEO Sam Bankman-Fried resigned due to a liquidity crisis that prompted intervention from regulators around the world.

The S&P 500 climbed 0.93 per cent to end the session at 3993.05 points.

The Nasdaq gained 1.88 per cent to 11,323.33 points, while Dow Jones Industrial Average rose 0.10 per cent to 33,749.18 points.

Volume on US exchanges was relatively heavy, with 13.5 billion shares traded, compared to an average of 12.0 billion shares over the previous 20 sessions.

Of the 11 S&P 500 sector indexes, six rose, led by energy, up 3.07 per cent, followed by a 2.48 per cent gain in communication services.

The S&P 500 growth index, which includes interest rate-sensitive technology stocks, rose 1.6 per cent, beating the value index's gain of 0.3 per cent.

For the week, the S&P 500 rose 5.9 per cent, the Dow added 4.15 per cent and the Nasdaq jumped 8.1 per cent.

It was the S&P 500's biggest weekly gain since June and the Nasdaq's largest weekly gain since March.

Worries about an economic downturn have hammered Wall Street this year.

The S&P 500 remains down about 16 per cent year to date, on course for its biggest annual decline since 2008.

US-listed shares of Chinese companies rose, with Alibaba Group Holding Ltd gaining 1.4 per cent after China eased some of its strict COVID-19 rules.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.7-to-one ratio.

The S&P 500 posted 22 new highs and no new lows.

The Nasdaq recorded 102 new highs and 110 new lows.