NEW YORK — U.S. stocks are rallying in near unison on Friday as they close out a bumpy week that had been dominated by sharp, market-cleaving swings.

The S&P 500 was 0.9% higher in morning trading following stronger-than-expected profit reports from 3M and several other big companies. The Dow Jones Industrial Average was up 602 points, or 1.5%, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 0.7% higher.

Widespread Gains Across Market Sectors

The market’s gains were widespread, including both Big Tech behemoths and smaller stocks. That’s a departure from much of the week, where a divide deepened between the handful of elite stocks that had dominated the market earlier this year and almost everyone else.

Nvidia rose 1.2% to cut into what had been a 4.8% loss for the week. Most of the other members of the small group of stocks known as the “Magnificent Seven” also rose to claw back some of their losses from earlier in the week.

They were under pressure after the latest profit results from Tesla and Alphabet raised worries that investors had gotten carried away by the frenzy around artificial-intelligence technology and taken Magnificent Seven prices too high.

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Smaller Stocks and Industrial Companies Rally

As those old leaders of the market’s leaderboard tumbled, formerly downtrodden areas of the market turned higher, and they continued their momentum Friday. The Russell 2000 index of smaller stocks climbed 1.3%. It’s up more than 10% this month, far better than the slight dip for the big stocks in the S&P 500.

Industrial companies and other businesses whose profits are closely tied to the strength of the economy also rallied. They had lagged this year as high interest weighed on the U.S. economy and slowed its growth.

Norfolk Southern jumped 11% to erase what had been a loss for the year so far after the rail company reported better profit for the latest quarter than analysts expected. It got a boost from insurance payments related to last year’s disastrous East Palestine derailment. The company also made progress in reducing its expenses and improving efficiency.

3M rose 17.4% after reporting stronger profit and revenue for the latest quarter than analysts expected. The company behind the Scotch-Brite and Nexcare brands also raised the bottom end of its forecasted range for profit for the full year of 2024.

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Inflation Update Boosts Market Sentiment

Stocks generally got another boost from the latest update on inflation, which investors saw as further evidence their expectations for coming cuts to interest rates will prove true.

U.S. consumers paid prices in June that were 2.5% higher than a year earlier, down from May’s inflation rate of 2.6%, the Commerce Department said on Friday. That’s according to the personal consumption expenditures index, which the Federal Reserve pays more attention to than the consumer price index, or CPI.

With inflation resuming its slowdown following a discouraging start to the year, traders are continuing to bet on a 100% probability that the Fed will begin easing its main interest rate in September, according to data from CME Group. The Fed has been keeping its federal funds rate at the highest level in more than two decades for roughly a year.

“Income growth is slow, spending growth is moderating, goods prices are in deflation, service price inflation is tame,” according to Brian Jacobsen, chief economist at Annex Wealth Management. “If this doesn’t give the Fed confidence to cut, nothing will.”

The yield on the 10-year Treasury fell to 4.20% following the inflation report from 4.25% late Thursday and from 4.70% in April. That’s a significant move for the bond market and offers support for stock prices.

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Notable Stock Performances

Among the other winners on Wall Street, where nearly 90% of the stocks in the S&P 500 were rising, Deckers Outdoors climbed 9.1% after it breezed past Wall Street’s earnings expectations on the strength of its Ugg and Hoka brand footwear. The California company also raised its full-year profit forecast.

Newell Brands soared 36.6% after the owner of Coleman camping supplies and Sharpie markers easily topped analysts’ profit targets.

Among the relatively few stocks to drop was DexCom, which tumbled nearly 40%. The diabetes care company reported stronger profit for the latest quarter than expected, but its revenue fell short of analysts’ expectations. So did its forecast for revenue in the current quarter.

In stock markets abroad, stock indexes were higher across much of Europe and Asia. Japan’s Nikkei 225 was an outlier and slipped 0.5% amid expectations the Bank of Japan may raise interest rates at a policy meeting next week.