Investors were encouraged after the Labor Department's producer price index — which measures the rate of inflation experienced by manufacturers when they purchase goods — suggested inflation is moderating. This raised hopes on Wall Street that central bankers won't need to hike interest rates to keep the economy in check, and might even lean toward lowering them.

With corporate earnings reports slowing, the market has put more weight on economic data to help find a direction. The fresh batch of economic reports could help assure central bankers that they have navigated the economy toward a soft landing in which growth slows enough to restrain inflation.

The stronger economic news, especially about inflation, injected a new dose of confidence that central bankers can now begin to mull a rate cut. It also helped reignite a rally stopped short Thursday after retail sales reports dimmed expectations about consumer confidence.

"To some degree, the advance is in reaction to the sharp selling on Thursday," said Richard Cripps, chief market strategist for Stifel Nicolaus. "The market was due for a blowoff, and I think the data you got this morning don't get in the way of the positive trend under way. A fair amount of investors want to be in the market."

According to preliminary calculations, the Dow Jones industrial average advanced 111.09, or 0.84 percent, to 13,326.22 — the biggest point rise so far this month. The index gained back most of the nearly 150 points it lost Thursday. It had reached a record Wednesday, its 21st record close since the start of the year and 43rd since the beginning of October.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 14.38, or 0.96 percent, to 1,505.85, and the Nasdaq composite index rose 28.36, or 1.12 percent, to 2,562.10.

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