Wall Street's major indexes closed higher on the week on Friday, as investors downgraded the likelihood of the US Federal Reserve renewing its rate hiking campaign.
In the week to Friday, the Dow Jones Industrial Average rose 2.65 percent to 11,381.47, notching up its second best weekly increase since the start of the year.
The technology-packed NASDAQ market closed up 5.16 percent on the week at 2,163.95, notching up its strongest weekly point gain since May 2002. The broad-market Standard and Poor's 500 rose 2.81 percent to 1,302.30.
Analysts said stocks got a strong boost from tepid inflation data released in the past week, which they said should comfort the Fed.
The central bank brought its long rate-hiking campaign to a halt almost two weeks ago.
The Fed funds rate is currently pegged at 5.25 percent.
"The market will probably be flattish next week. As long as the economic data remain certainly positive, that's going to give investors the impetus to continue to put money to work here," said Michael Malone, an analyst at Cowen and Co.
Stocks gained in the past week partly as traders began betting more heavily that the Fed will not hike US interest rates in coming months, especially following modest producer and consumer price inflation for July.
"I do actually think the Fed is done" with rate hikes, Malone said.
However, one area of concern that investors will be tracking closely in the coming week is the nation's housing market which has entered a downturn following several boom years.
"The focus is going to be on the housing market. If the housing data are weaker than expected, that draws the question of how weak the economy is going to get," said Peter Cardillo, an analyst at SW Bach.
* Dow Jones: up 2.65 percent to 11,381.47.
* NASDAQ: up 5.16 percent to 2,163.95.
* Standard and Poor's 500: up 2.81 percent to 1,302.30.
* Ten-year Treasury bond yield: down to 4.835 percent from 4.967 percent.
* Thirty-year Treasury bond yield: down to 4.973 percent from 5.092 percent.
However, it is currently unclear whether the housing market will experience a soft or hard landing, as home sales slow and newly built homes take longer to sell.
"Reports on the status of the economy are expected to reinforce the picture of a fairly broad-based slowdown in activity in the third quarter. New and existing home sales are expected to decline in the month of July," said Brian Bethune, an analyst at Global Insight.
Existing US home sales are forecast to slow to 6.58 million units in July, compared with the 6.62 million units sold in June, according to Wall Street economists.
If sales decline as forecast it will mark the fourth straight monthly drop in existing home sales.
Bond prices strengthened over the week.
The yield on the 10-year Treasury bond dropped to 4.835 percent from 4.967 percent a week earlier, while that on the 30-year bond fell to 4.973 percent from 5.092 percent. Bond yields and prices move in opposite directions.