U.S. stock markets advanced during Friday's morning session, as Wall Street prepared to close another volatile week. Signs of a slowing U.S. economy have bolstered expectations for potential interest rate cuts from the Federal Reserve. Traders were also assessing the latest developments regarding the conflict in the Middle East.

The S&P 500 index rose by 0.7%, rebounding after three consecutive days of decline. The Nasdaq 100 index gained 0.8%, while the Dow Jones Industrial Average increased by 0.7%. The Bloomberg Magnificent 7 index was largely flat, hovering near correction territory. Brent crude oil fell 1.4% to $99.02 per barrel.

Amid growing concerns in recent weeks that the Iran conflict could impact gasoline prices, a key measure of U.S. consumer sentiment fell to a three-month low. Concurrently, fourth-quarter Gross Domestic Product growth was revised down to an annualized rate of 0.7%, compared to a preliminary estimate of 1.4%, a period during which the government experienced a record-long shutdown.

Other data indicated that job openings increased and layoffs decreased in January, suggesting an improvement in labor demand before recent signs of weakness emerged. Consumer spending showed minimal growth in January, while the core Personal Consumption Expenditures Price Index, the Federal Reserve's preferred inflation gauge, met expectations.

Bret Kenwell from eToro commented, "Investors have a significant amount of economic data to digest. While the CPI report highlighted a stubborn but slowly improving inflation backdrop, the PCE data delivered a more concerning signal. Crucially, neither report reflects the recent surge in energy prices."

The latest economic figures have shifted market focus toward next week's Federal Reserve meeting. It is widely anticipated that officials will hold interest rates steady, with traders watching for any potential changes to the central bank's outlook, including the possible incorporation of effects from the Iran conflict.

Ellen Zentner of Morgan Stanley Wealth Management stated, "Despite indications of an economic slowdown, inflation is proving more persistent, reinforcing the expectation that the Fed will maintain a wait-and-see stance."