U.S. stocks advanced on Friday after the Federal Reserve signaled that interest-rate cuts could be on the table later this year. Investors responded quickly to the prospect of easier monetary policy, which could support borrowing, spending, and corporate profits if inflation continues to ease.

The rally came alongside fresh inflation data that showed price pressures cooling more than many analysts had expected. That combination strengthened confidence that the central bank may have room to lower rates without reigniting inflation, a shift that typically lifts equities and other risk assets.

Market gains were broad, reflecting optimism across sectors as traders reassessed the outlook for the second half of the year. Bond yields also moved in response to the policy signals, underscoring how closely investors are watching the Fed’s next steps.

Even so, the path forward remains uncertain. Officials have kept emphasizing that any move will depend on incoming economic data, leaving markets sensitive to future inflation reports, labor figures, and broader signs of economic slowdown.