Stocks rebounded sharply on strong earnings from some Big Tech names and an encouraging reading on consumer spending. 

Better-than-expected quarterly reports from Google ( GOOG ) parent Alphabet (GOOGL) and Microsoft ( MSFT ) helped reignite risk appetite, while the latest economic news alleviated immediate concerns that a potential soft landing was increasingly unlikely. 

Market participants started the day with a sigh of relief after the latest reading on inflation essentially matched economists' forecast. The Personal Consumption Expenditures Price (PCE) Index rose 0.3% last month, the Bureau of Economic Analysis said Friday. 

Consumer spending was surprisingly strong, rising 0.5% in March. Taken together, the inflation and consumption data helped calm some market jitters in wake of Thursday's release of gross domestic product (GDP). Stocks sold off sharply in the previous session over concerns that economic growth cooled in the first quarter even as price pressures continued to mount. 

"Big-tech earnings last night from Alphabet and Microsoft ( MSFT ) are driving risk-on sentiments today, with investors largely ignoring two consecutive days of hotter-than-projected inflation," wrote Jose Torres, senior economist at Interactive Brokers ( IBKR ). A deflationary outlook from Walmart ( WMT ) CEO John Furner also bolstered "animal spirits," Torres said. 

As for Microsoft ( MSFT ), the Buy-rated Dow Jones stock rose 1.8% after reporting better-than-expected quarterly profit and revenue the previous evening. The company said strong demand from artificial intelligence (AI) boosted demand for software and services. 

In other single-stock news, integrated oil majors Exxon Mobil ( XOM ) and Chevron ( CVX ) moved in opposite directions. XOM missed Wall Street's profit estimate, sending shares down 2.9% Friday. Chevron ( CVX ), the Dow's only energy name, exceeded analysts' estimates. CVX stock ended the session 0.3% higher.

At the closing bell, the blue-chip Dow Jones Industrial Average was up 0.4% at 38,239, while the broader S&P 500 rose 1% to 5,099. The tech-heavy Nasdaq Composite soared 2% to 15,927.

Alphabet tops $2 trillion in market cap

Alphabet reported Street-beating earnings and revenue late Thursday, boosted by solid results in cloud services and advertising. But what really put the stock over the top was the Google ( GOOG ) parent's announcement of its first dividend.

The company said it plans to start paying a quarterly cash dividend of 20 cents a share, subject to board approval. Moreover, Alphabet authorized $70 billion in new stock buybacks, or the same amount as last year.

The news propelled GOOGL stock to a 10.2% gain on the day, sending its stock past $2 trillion in market capitalization for the first time.

Alphabet joins Magnificent 7 stocks Apple (AAPL) and Nvidia ( NVDA ) in the club of U.S.-listed companies with market values of more than $2 trillion. Microsoft ( MSFT ), the world's most valuable publicly traded company, remains the sole member of the $3 trillion club.