U.S. equities continued their upward trajectory during Friday's midday trading, with the Nasdaq Composite Index rising by 0.9%. This positive movement occurred despite data showing the U.S. economy grew at a slower-than-expected annualized rate of just 1.4% in the fourth quarter, falling short of the 2.5% growth forecast by economists in a Dow Jones survey. The previous quarter's growth of 4.4% had significantly exceeded expectations.

This disappointing economic data has led traders to adopt a more pessimistic outlook on U.S. economic growth. Concurrently, inflation remained stubbornly high, with the core Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rising 3% in December. This figure matched market expectations but kept the key inflation measure well above the Fed's 2% target.

A significant legal development saw the U.S. Supreme Court reject a global tariff policy associated with former President Donald Trump, dealing a major legal setback to one of his signature economic initiatives. The court ruled that the use of federal emergency powers to impose these tariffs exceeded presidential authority. Market participants generally believe that the reversal of these tariffs would be received positively by U.S. stock markets.

In specific index movements, the Dow Jones Industrial Average gained 54.12 points, or 0.11%, to 49,449.28. The Nasdaq Composite advanced 203.91 points, or 0.90%, to 22,886.64. The S&P 500 increased by 34.52 points, or 0.50%, to 6,896.41.

Internally, Federal Reserve policymakers appear divided, with one faction focused on supporting the labor market and another more concerned with persistent inflation. While the overall pace of price increases has been moderating, the inflation rate continues to exceed the central bank's target. Recent meeting minutes from the Fed indicated that some officials require more evidence of cooling inflation before supporting further interest rate cuts.

Geopolitical tensions also influenced markets, as oil prices rose following heightened tensions between the U.S. and Iran after Trump suggested a potential military strike. For the week, the S&P 500 was on track for a modest 0.4% gain. The technology-heavy Nasdaq was poised to end a five-week losing streak, having risen 0.6% through Thursday. The Dow Jones Industrial Average, however, was headed for a 0.2% decline over the same period.