US stocks rallied on the last day of the trading week as investors increased bets that the country's Federal Reserve will cut interest rates next month while all three of the major indexes posted losses for the week amid concerns over lofty technology valuations.

The Nasdaq fell for a third straight week in its longest run of weekly losses since March. The index is now down 7 percent from its October high. During the session, shares of Nvidia briefly jumped after sources said the Trump administration is considering green-lighting sales of the company's H200 artificial intelligence chips to China. The stock ended down 1 percent, still well off of its lows of the session.

Nvidia is down 5.9 percent for the week even though the AI leader late on Wednesday reported strong quarterly results and gave a robust forecast. New York Fed president John Williams, a voting member of the Federal Open Market Committee, said the central bank can still cut rates "in the near term" without putting its inflation goal at risk. That boosted market views for a rate cut at the Fed's December meeting, even as other policymakers insisted that borrowing costs should remain steady for now.

Markets are now pricing in a nearly 72 percent chance of a rate cut from the central bank at its December meeting, according to the CME's FedWatch Tool, up from 39.1 percent in the prior session.

"The big tailwind today is that shift in rate cut odds for the December Fed meeting," said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.

All 11 of the S&P 500 sectors ended higher.

The Dow Jones Industrial Average rose 493 points, or 1.08 percent, to 46,245 on Friday, the S&P 500 gained 64 points, or 0.98 percent, to 6,602 and the Nasdaq Composite gained 195 points, or 0.88 percent, to 22,273.

For the week, the Dow was down 1.9 percent, the S&P 500 was down about 2 percent and the Nasdaq was down 2.7 percent. Also, the small-cap Russell 2000 index fell for a fourth straight week in its longest run of weekly losses since March.

Stocks have been especially volatile in the past two sessions, reflecting heightened investor anxiety over high valuations in the technology sector, ambitious AI spending plans and concerns about what might happen at the December Fed meeting.

Also on Friday, Boston Fed president Susan Collins said on CNBC that policy was "in the right place," indicating skepticism about the need for another rate cut.

Global brokerages are split over whether the Fed will cut interest rates in December or hold them.

Data on Thursday showed the unemployment rate increased in September even as employers added more jobs than economists had expected during the month. The report was delayed because of the long government shutdown.

Eli Lilly shares ended 1.6 percent higher after the company during the session became the first drugmaker to touch the US$1 trillion level of market capitalization.

Among the day's biggest boosts, Alphabet shares closed up 3.5 percent on Friday, while Apple was up 2 percent and Meta Platforms was up 0.9 percent.

Advancing issues outnumbered decliners by a 3.1-to-one ratio on the NYSE. There were 68 new highs and 213 new lows on the NYSE. On the Nasdaq, 3,499 stocks rose and 1,274 fell as advancing issues outnumbered decliners by a 2.75-to-1 ratio.

Volume on US exchanges was 21.06 billion shares, compared with the 20.03 billion average for the full session over the past 20 trading days. (Reuters)