After a sluggish start to the week, U.S. stocks rallied on Wednesday and Friday, pushing the major indexes to weekly gains of 2% to 4%. This marked only the second positive week in the past six for the S&P 500, which ended Friday less than 2% below its record high from December 6.

Yields on U.S. government debt declined, retreating from their highest levels in over 14 months and halting a surge that began last September. The 10-year Treasury yield closed at approximately 4.61% on Friday, down from 4.77% the previous week.

Earnings reports from major U.S. banks exceeded lofty market expectations, with three institutions reporting that their fourth-quarter earnings more than doubled compared to a year earlier. Ahead of earnings season, analysts had projected nearly 40% growth in financial sector earnings—the highest forecast among the S&P 500’s 11 sectors, according to FactSet.

Stocks gained further and bond yields fell on Wednesday after the latest Consumer Price Index (CPI) report indicated a cooling in inflationary pressures. Core CPI, which excludes volatile food and energy prices, rose at an annual rate of 3.2% in December—slightly below November’s rate and economists’ expectations of 3.3%.

U.S. retail sales rose by 0.4% in December, falling short of economists’ forecast of 0.6%. However, the report offered a bright spot as November’s previously reported 0.7% sales increase was revised upward to 0.8%.

China, the world’s second-largest economy, grew at an annual rate of 5.4% in the fourth quarter, surpassing economists’ expectations and improving from 4.6% in the third quarter. For the full year 2024, China’s economy expanded by 5.0%, meeting the government’s growth target.

In contrast, Germany’s economy contracted for the second consecutive year, with GDP shrinking by 0.2% in 2024 following a 0.3% decline in 2023. The downturn was driven by sluggish consumer spending and intense competition facing the country’s automotive industry.