A broad rally on Wall Street closed out a fifth straight week of gains for the market Friday, driving the S&P 500 to its highest level in more than a year.

The benchmark index rose 0.6%, eclipsing its previous high for the year set in July. The Dow Jones Industrial Average closed 0.8% higher, while the Nasdaq composite added 0.6%. Gainers outnumbered decliners by roughly 6-to-1 on the New York Stock Exchange.

The latest gains followed the market's best month in more than a year. Growing expectations on Wall Street that the Federal Reserve may cut interest rates a soon as early next year have put investors in a buying mood.

"A lot of investors now are accelerating when the Fed is likely to initiate its first cut to the end of the first quarter of 2024, rather than the the prior forecast of some time in the second quarter," said Sam Stovall, chief investment strategist at CFRA.

Hope that the Federal Reserve is finally done raising interest rates in its fight to control inflation helped push markets steadily higher through much of November. Recent economic data supports that view.

On Thursday, the Fed's preferred measure of inflation showed a cooling last month. Inflation has been easing overall since the middle of 2022 when the Fed started aggressively raising its benchmark interest rate. That followed mostly encouraging updates on economic growth and consumer confidence that have raised hopes that the Fed will achieve its sought-after "soft landing," which involves cooling the inflation without throwing the economy into a recession.

A government report on Friday showed that construction spending continued rising in October, topping economists' forecasts for growth. Wall Street will get several updates next week on the job market, including the government's closely watched monthly employment report for November.

Speaking at Spelman College in Atlanta on Friday, Fed Chair Jerome Powell said "It would be premature to conclude with confidence" that the central bank has raised its benchmark interest rate high enough to fully defeat inflation. He added that it's not the time to speculate on when the Fed will cut rates.

That didn't dash Wall Street's optimism of a Fed rate cut happening as soon as next spring. Investors see a nearly 56% chance of it happening in March, up from just a 21% chance a week ago, according to data from CME Group.

Treasury yields have been broadly falling amid sentiment that the Fed's aggressive rate hike policy is finished and potentially heading for a reversal. The trend continued Friday. The yield on the 10-year Treasury, which influences mortgage rates, fell to 4.21% from 4.34% late Thursday. It was as high as 5.00% in October.

The yield on the two-year Treasury fell to 4.55% from 4.70% late Thursday. Falling bond yields have helped relieve pressure on stocks, especially technology stocks.

Investors entered December on track to close out the year with solid gains. The S&P 500 is up 19.7% and the Nasdaq composite is up 36.7% in 2023. Smaller-company stocks have also recently turned higher for the year following the market's recent rally. The Russell 2000 index is now up 5.8% for the year.

All told, the S&P 500 rose 26.83 points to 4,594.63, its highest level since March 30, 2022. The Dow added 294.61 points to close at 36,245.50. The Nasdaq gained 78.81 points to finish at 14,305.03.

European markets closed higher and Asian markets finished mostly lower.

Industrial stocks were among the biggest gainers Friday. Construction equipment maker Caterpillar rose 2.4% and railroad operator Union Pacific rose 2.7%.

Elsewhere in the market, computer maker Dell fell 5.2% after giving investors a weaker-than-expected revenue forecast. Beauty products retailer Ulta Beauty jumped 10.8% after reporting results that beat estimates.

Oil prices remained relatively steady. They have been broadly easing for several months, as have U.S. gasoline prices. That is helping to relieve pressure on American families and businesses from rising prices.