This happens at a time when Wall Street is drastically lowering its expectations of Fed rate cuts this year. Since the beginning of the year, traders have adjusted their bets from seven to just one.

Wall Street bounces strongly this Friday thanks to the earnings reports from Alphabet (GOOG, GOOGL) and Microsoft (MSFT), which ignite hopes of a rally led by big tech, even as a reading of the Federal Reserve’s preferred inflation gauge reveals that price pressures remain persistent.

The S&P 500 (^GSPC) is up 1%, while the tech-heavy Nasdaq Composite (^IXIC) advances by 2%. The Dow Jones Industrial Average (^DJI), which includes fewer tech stocks, increases by 0.5% or more than 150 points.

The gains for Alphabet and Microsoft provided a boost to stocks following Thursday’s sell-off, with increases of around 9% and 3%, respectively. The stellar results from the “Fabulous Two” duo showed cloud revenue driven by strong demand for artificial intelligence, and the possibility for both to benefit from that boom.

At the same time, the market digested the latest reading of the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, for March. The “core” measure in that report, which excludes the cost of food and energy, rose by 2.8% compared to last year, above estimates of 2.7% but unchanged from the previous year-over-year increase.

This reading comes at a time when Wall Street is drastically lowering its expectations of Fed rate cuts this year. Since the beginning of the year, traders have adjusted their bets from seven to just one. Stocks rise as investors positively interpret the persistent inflation reading.

Investors overlooked another worrying inflation reading on Friday, driven by hope that another rally led by big tech could lift the market above broader uncertainties about the Federal Reserve’s policy.