The Dow Jones Industrial Average rose significantly on Friday, driven by gains from Home Depot and Caterpillar, as investors began diversifying away from the tech-heavy market.

The Dow climbed 247.15 points (0.62%) to close at 40,000.90, reaching a new all-time high of 40,257.24 during the session.

Home Depot and Caterpillar rose by 1.7% and nearly 1.4%, respectively. The S&P 500 increased by 0.55%, closing at 5,615.35, while the Nasdaq Composite gained 0.63% to finish at 18,398.45.

This rally followed a Thursday report showing a 0.1% decline in the consumer price index, raising hopes for a potential Federal Reserve rate cut in September.

The Russell 2000 Index also saw a 6% weekly gain, reflecting optimism for smaller companies amidst a favorable economic outlook, CNBC has reported.

Despite mixed reactions to second-quarter earnings from banks, the market focused on broader trends, with Nvidia rebounding 1.4% after a recent sell-off.

The tech sector remains the strongest performer this year, with the S&P 500 up nearly 18%, led by a 33% increase in technology stocks.

Written by B.C. Begley