Strong earnings reports from Alphabet Inc. (NASDAQ:GOOGL) and Microsoft Corp. (NASDAQ:MSFT) have restored positive sentiment in the market, sweeping away fears of increasing risks of stagflation that had emerged from Thursday's data.

Although the latest PCE inflation report signaled higher-than-expected annual readings, they failed to meaningfully impact on already low expectations for Fed rate cuts. Rather, investors opted to focus on positive signals stemming from corporate earnings.

The S&P 500 gained over 1%, and is up by 2.8% this week, on track for its best week since late October 2023. The Nasdaq 100 outperformed with a 1.8% increase, pushing...