U.S. stocks rallied on Friday to close out a strong week on optimism over the health of the economy and path of interest rates as investors braced for a slew of policy changes under the incoming Trump administration.

The S&P 500 and Dow Industrials registered their biggest weekly percentage gains since early November and the Nasdaq recorded its best since early December. Data this week allayed fears that inflation would resurge while expectations have grown that the Federal Reserve will bump up the timing and magnitude of rate cuts this year.

Nine of the 11 S&P 500 sectors rose, led by a 1.7% rise in consumer discretionary (.SPLRCD) stocks, while healthcare (.SPXHC) and real estate (.SPLRCR) declined.

Nvidia (NVDA.O), opens new tab gained 3.1% and Broadcom (AVGO.O)  advanced 3.5% after Barclays raised its price targets on the stocks, helping to boost the PHLX semiconductor index (.SOX)  by 2.84%.

In addition, Intel (INTC.O) surged 9.25% on speculation of a takeover and Qorvo (QRVO.O)  shot up 14.43% after activist investor Starboard Value disclosed a 7.7% stake in the chipmaker.

Shares of social media firms such as Meta (META.O)  had a muted reaction after the Supreme Court ruled against TikTok's challenge to a law that would force its app's sale or ban in the United States. Meta shares edged up 0.24% while Snap (SNAP.N) dipped 3.21%.

Advancing issues outnumbered decliners by 2.16-to-1 on the NYSE and by 1.73-to-1 on the Nasdaq.

The S&P 500 posted 24 new 52-week highs and no new lows, while the Nasdaq Composite recorded 66 new highs and 73 new lows.

Volume on U.S. exchanges was 14.57 billion shares, compared with the 15.65 billion average for the full session over the last 20 trading days.

The Commerce Department reported on Friday that U.S. single-family homebuilding rose to a 10-month high although demand will likely be curbed by rising mortgage rates and an oversupply of new properties.

A separate report revealed a surge in manufacturing output last month.