Stocks staged their first rally of 2023 to close out the week higher on Friday after the December jobs report and other economic data showed signs that inflation may be cooling. The Dow Jones Industrial Average jumped nearly 700 points, while the S&P 500 and Nasdaq Composite added 2.3% and 2.6%, respectively.

Here's how the market settled to close out the week:

S&P 500 Index (SPY  ): +2.28% or +86.90 points to 3,895.00

Dow Jones Industrial Average (DIA  ): +2.12% or +699.71 points to 33,629.79

Nasdaq Composite Index (QQQ  ): +2.56% or +264.05 points to 10,569.29

In the spotlight Friday, the December non-farm payrolls report showed that the U.S. economy added 223,000 new positions last month, slightly higher than the 200,000 expected. However, wages grew at a slower pace than anticipated at 0.3% for the month over the expected 0.4%. Still, the unemployment rate ticked lower to 3.5%, below estimates for 3.7%, signalling that the labor market is remaining resilient in spite of the Federal Reserve's aggressive rate hikes.

Wall Street also responded positively to the ISM's non-manufacturing purchasing managers' index (PMI) report that showed the services industry contracting in December, a sign that the economy may be slowing in response to the central bank's hawkish monetary policy. December Services PMI fell to 49.6 from 56.5 in November, with readings below 50 indicating contraction in the sector.

Friday marked the Dow and S&P 500's best day since November 30 and the best for the Nasdaq since December 29 as Wall Street shook off a recent downbeat stretch. Every component on the Dow also closed in the green on Friday. The session's positive moves also helped major averages end the week on a high note, with the Dow and S&P 500 each closing up 1.5% higher, while the Nasdaq added 1% for the week.

For stocks, shares of World Wrestling Entertainment (WWE  ) soared nearly 17% after The Wall Street Journal reported former CEO Vince McMahon will be returning to the company to explore a potential sale of the business. McMahon had retired last July following a misconduct probe.

Biogen (BIIB  ) shares rose nearly 3% after the U.S. Food and Drug Administration (FDA) announced the accelerated approval of lecanemab, the biotech's Alzheimer's drug developed in partnership with Japanese firm Eisai. Biogen's trading was halted Friday afternoon on the news.

Bed Bath & Beyond (BBBY  ) remained in the hot seat on Friday after plunging over 30% on Thursday on news the retailer is exploring options that include bankruptcy as it runs out of cash. Shares fell another 22% on Friday.

For next week, market participants will look ahead towards more Fedspeak, including remarks from Fed Chair Jerome Powell on Tuesday, as well as December's CPI report and reports on consumer sentiment later in the week.