The blue-chip Dow rose on Friday to hit an intraday record and small-cap stocks outperformed after a benign inflation report cleared the way for the Federal Reserve to focus on shoring up the labor market while continuing its interest rate easing.

Although economic stimulus plans from the Chinese government caused the Chinese stock market to jump, retail investors largely ignored the rally. Net buying of Chinese ETFs and ADRs from retail investors this week remained at muted levels compared to 2021.

Investors will be laser focused on the jobs market next week, with the ADP employment report on Wednesday and the September jobs report on Friday.

Treasury yields and the dollar fell while the Dow registered a record closing high on Friday as a subdued U.S. inflation report lifted expectations of an outsized interest rate cut at the Federal Reserve's November policy meeting.

U.S. stocks closed higher, with the S&P 500 scoring another record close as investors await an inflation update on Friday. The Dow Jones Industrial Average added 260.36 points, or 0.6%, ending at 42,175.

The blue-chip Dow Jones Industrial Average closed at a record high on Friday as investors welcomed a subdued inflation report that also lifted small-cap stocks which stand to benefit from more interest rates cuts by the Federal Reserve.