Stock Market Today: Stocks Sizzle on Hopes for a More Dovish Fed

Markets ended the week on a positive note Friday, finishing sharply higher after some economic data raised the possibility of a slower pace of rate hikes from the Federal Reserve. 

The blue-chip Dow Jones Industrial Average soared 2.6% to finish at 32,861, while the broader S&P 500 jumped 2.5% at 3,901. The tech-heavy Nasdaq Composite vaulted 2.9% to end at 11,102. 

Friday's session made for an upbeat end to a tumultuous week of mixed trading driven by disappointing quarterly reports from a slew of the biggest technology companies. On Friday, it was Amazon.com's (AMZN (opens in new tab), -6.8%) turn to take a dive, as shares tumbled after the e-commerce and cloud-computing giant gave a downbeat revenue forecast for the holiday shopping season. Google parent Alphabet (GOOGL (opens in new tab)), Facebook parent Meta Platforms (META (opens in new tab)) and Microsoft (MSFT (opens in new tab)) all delivered discouraging results earlier in the week. 

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But Friday's action was dominated by a better-than-expected reading on inflation. The core Personal Consumption Expenditure Index, which is the Fed’s preferred measure of inflation, gained 0.5% month over month in September. That was just below economists' expectations, and fueled hope that the central bank could slow down its pace of interest rate increases.

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The Best Healthcare Stocks to Buy

A slower pace of inflation is to be expected if the economy really is set for a slowdown, and that only reinforces the case for equities that hold up well in a down market. Although the initial reading on third-quarter gross domestic product came in at a better-than-expected 2.6% annual rate (opens in new tab) – and rebounded after two consecutive quarters of contraction – experts say the underlying data reveal an increasingly weak economy (opens in new tab). If that does turn out to be the case, investors would be well-advised to adopt strategies that work in a bear market (opens in new tab). Adding reliable and rising dividend payers (opens in new tab) to a portfolio can certainly help folks' returns hold up in down markets, especially when those names are concentrated in defensive sectors. The best consumer staples stocks (opens in new tab) are a good place to start. 

But few sectors are as dividend-rich and defensive as healthcare. The driving narrative of the past few years has been the industry's response to COVID-19, and some of those tailwinds are beginning to abate. We've found several healthcare stocks set to reach new heights (opens in new tab) as the pandemic continues to ebb.