The S&P 500 dipped Friday, but was on track for its second winning week in a row.
The Dow Jones Industrial Average was little changed. The S&P 500 eased 0.2%. The Nasdaq Composite dipped 0.9%.
The S&P 500 and Nasdaq Composite are on track to close at least 1% higher. The Dow is marginally lower week to date.
The S&P 500 is now about 3% higher in March, more than erasing its losses since Russia invaded Ukraine late last month.
The rebound has come even as the war in Ukraine continues and interest rates shoot higher, with the Federal Reserve is set to hike rates several more times this year.
“Equities are rallying despite a hawkish Fed and stagflation concerns, as many believe there is no alternative to stocks,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
The benchmark 10-year rate on Friday surged to a fresh multi-year high of 2.5% as investors priced in a more aggressive rate hike cycle.
Financial stocks rose Friday as the 10-year yield jumped. Bank of America and Wells Fargo each rose more than 1%.
On the downside, technology stocks eased, weighing on the Nasdaq. Fortinet lost more than 2% and Micron lost more than 1%.
Fed Chair Jerome Powell on Monday vowed to be tough on inflation. The remarks came after the Fed raised interest rates for the first time since 2018 last week, with hikes coming at each of the six remaining policy meetings this year.
Powell on Monday noted rate hikes could go from the traditional quarter-percentage-point moves to more aggressive half-point increases if necessary.
The central bank chief’s comments led Wall Street to raise rate hike expectations, with firms from Goldman Sachs to Bank of America penciling in half-point hikes in future Fed meetings this year.
Meanwhile, investors looked to promising signs the economy can run strong even as the interest rates have climbed amid expectations for a more aggressive Fed.
First-time jobless claims last week reached the lowest tally since 1969, the Labor Department reported Thursday — the latest sign of a resilient labor market. Economists expect the March jobs report next week to show similar strength.
Traders are keeping an eye on Europe as the Ukraine-Russia war continues. The European Union on Friday struck a gas deal with the U.S. in an effort to reduce its dependency on Russian energy.
–CNBC’s Christopher Hayes contributed to this report.