U.S. stocks rose on Friday with the S&P 500 building on its rally to records, as investors bet that higher inflation will be temporary as the economy continues to recover from the pandemic.

The broad equity benchmark climbed 0.2% to hit another all-time high. The Dow Jones Industrial Average rose 160 points, or 0.5%, while the Nasdaq Composite gained 0.2%.

Wall Street extended gains after a key inflation indicator that the Federal Reserve uses to set policy rose 3.4% in May, the fastest increase since the early 1990s, the Commerce Department reported Friday. The reading matched the expectation from economists polled by Dow Jones.

The core personal consumption expenditures price index increase reflects the rapid pace of economic expansion and resulting price pressures, and amplified how far the nation has come since the pandemic-induced shutdown of 2020.

“This provided support to the Fed’s argument that inflation is transitory and will help allay fears that we are witnessing runaway inflation,” said Anu Gaggar, senior global Investment analyst at Commonwealth Financial Network. “This should continue to provide support to risk assets such as equities.”

The S&P 500, which closed at a record Thursday, is up 2.6% for the week so far, which would be its best gain since early April. The Dow is up 3.2% this week and the Nasdaq is up 2.6% since last Friday.

Nike‘s stock surged 14%, helping to boost sentiment for the Dow. The company reported earnings and revenue that blew past Wall Street estimates. Digital sales also jumped 41% since last year and 147% from two years ago.

On the flipside Friday, FedEx dipped 4% despite beating on the top and bottom lines of its earnings. FedEx also gave a strong yearly outlook.

The Federal Reserve announced the industry could easily withstand a severe recession. The Fed, in releasing the results of its annual stress test, said the 23 institutions in the 2021 exam remained “well above” minimum required capital levels during a hypothetical economic downturn. The decision cleared the way for the banks to raise dividends and buy back more stock, which was suspended during the pandemic.

President Joe Biden announced Thursday that the White House struck an infrastructure deal with a bipartisan group of senators. The lawmakers have worked for weeks to craft a roughly $1 trillion package that could get through Congress with support from both parties. The framework will include $579 billion in new spending on transportation like roads, bridges and rail, electric vehicle infrastructure and electric transit, among other things.

Shares of Caterpillar jumped 2.6% on optimism around an infrastructure deal on Thursday. The shares were higher by another 1% Friday.

The stock market came back from last week’s swoon induced by worries about a tighter Federal Reserve. Last week, the Dow fell 3.5% and the S&P 500 shed 1.9% as the Fed moved up its timeline for interest-rate increases.

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