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

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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.

65 Best Dividend Stocks You Can Count

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, -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), Facebook parent Meta Platforms (META) and Microsoft (MSFT) 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 – and rebounded after two consecutive quarters of contraction – experts say the underlying data reveal an increasingly weak economy. If that does turn out to be the case, investors would be well-advised to adopt strategies that work in a bear market. Adding reliable and rising dividend payers 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 are a good place to start.

5 Best Dow Dividend Stocks to Buy Now

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 as the pandemic continues to ebb.

3 Healthcare Stocks Set to Prosper in a Post-Covid World

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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.

A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about markets and macroeconomics.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.