Dow rallies to year's highest close, caps blockbuster month

US stock market: The Dow Jones Industrial Average closed at its highest level since January 2022 as investors crossed the finish line of a banner month for stocks and viewed cooling inflation data as a harbinger of easing Federal Reserve monetary policy.

The Dow (.DJI) was the clear outperformer, with a solid boost from Salesforce (CRM.N) on the heels of its consensus-beating earnings report.

The S&P 500 (.SPX) closed modestly green, while tech and tech-adjacent momentum stocks, led by Nvidia (NVDA.O), pulled the Nasdaq into negative territory.

Still, the S&P 500 and the Nasdaq (.IXIC) notched their largest monthly percentage gain since July 2022. November was the Dow's best month for percentage gains since October 2022.

"We're putting the cherry on top of a banner month," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "It's a nice reminder for investors how worried everyone was a month ago, and we just finished one of the best months in history for stocks."

Among data released Thursday, the Commerce Department's closely watched Personal Consumption Expenditures (PCE) report showed inflation is cooling as expected, along with consumer spending. The data reinforced expectations that the Fed has completed its rate hiking cycle.

While New York Fed President John Williams reiterated the central bank's determination to remain data dependent, he would not rule out the possibility of further rate hikes if inflation fails to continue to moderate.

"Kicking off much of the strength this month was the realization that inflation is quickly coming back to earth we saw that again today with core PCE data suggesting inflation is no longer a major headwind," Detrick added.

Financial markets have priced in a 95.8 per cent likelihood that the central bank will let its key Fed funds target rate stand at 5.25 per cent-5.50 per cent at December's policy meeting.

"There's likely no rate hikes any time soon, the next move will likely be a cut, probably in the middle of next year," Detrick said. "The massive drop in (Treasury) yields this month is the bond market's way of saying it thinks the Fed is indeed done raising rates."

Powell is scheduled to participate in two separate discussions on Friday, at 11 a.m. ET and 2 p.m. ET.

The Dow Jones Industrial Average (.DJI) rose 520.47 points, or 1.47 per cent, to 35,950.89, the S&P 500 (.SPX) gained 17.22 points, or 0.38 per cent, at 4,567.8 and the Nasdaq Composite (.IXIC) dropped 32.27 points, or 0.23 per cent, to 14,226.22.

Among the 11 major sectors of the S&P 500, healthcare stocks (.SPXHC) outperformed, while communication services (.SPLRCL) suffered the steepest percentage decline.

Dow Transports (.DJT), considered a barometer of economic health, advanced 1.4 per cent.

Salesforce jumped 9.4 per cent following the company's higher-than-expected profit forecast based on solid demand for its cloud services.

Ford Motor Co (F.N) slid 3.1 per cent after the automaker set the cost of a new labor deal at $8.8 billion and cut its full-year forecast.

Data cloud company Snowflake (SNOW.N) surged 7.1 per cent after it forecast fourth-quarter product revenue above Street estimates.

Pinterest (PINS.N) and Snap Inc (SNAP.N) gained 2.4 per cent and 6.5 per cent, respectively, after Jefferies' upgrade of the social media firms to "buy" from "hold."

Advancing issues outnumbered decliners on the NYSE by a 1.62-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored decliners.

The S&P 500 posted 37 new 52-week highs and two new lows; the Nasdaq Composite recorded 75 new highs and 109 new lows.

Volume on US exchanges was 13.22 billion shares, compared with the 10.55 billion average for the full session over the last 20 trading days.