Stocks recovered from an early slide on Wall Street and closed broadly higher Friday, notching their biggest weekly gain in 16 months.

The S&P 500 rose for the fourth straight day, adding 1.2 per cent to a streak that included back-to-back days with gains of 2 per cent. The Dow Jones Industrial Average rose 0.8 per cent, while the Nasdaq composite rose 2 per cent. The three indexes each had their best week since November 2020.

The Australian sharemarket is set to start the week in positive territory, with futures on Saturday pointing to a rise of 59 points, or 0.8 per cent, at the open.

This week’s market rally came as Wall Street drew encouragement from the Federal Reserve, which announced its first interest rate hike since 2018 and signalled several more to come. The move, which had been widely expected for months by the market, sends a message that the central bank is focused on fighting the highest inflation in decades. Fed Chair Jerome Powell also stressed confidence that the economy is strong enough to withstand higher interest rates.

The Fed’s action and economic outlook helped give markets a better sense of what to expect going forward, said Bill Northey, senior investment director at US Bank Wealth Management.

“This resulted, to a certain extent, in a relief in the stock market that has ridden that over the course of the past several days,” he said.

Stocks also got a boost as the price of US crude oil, which briefly topped $US130 a barrel last week amid concerns that the conflict in Ukraine will squeeze energy markets, eased briefly below $US94 a barrel on Wednesday and has since been hovering below $US110 a barrel.

The S&P 500 rose 51.45 points to 4,463.12, bringing its weekly gain to 6.2 per cent. The Dow gained 274.l7 points to 34,754.93, and the Nasdaq added 279.06 points to 13,893.84.

Smaller company stocks also gained ground. The Russell 2000 index rose 21.12 points, or 1 per cent, to 2,086.14.