US stocks finished the week on a high note, fueled by speculation that the Federal Reserve will not raise interest rates above the peak levels that have already been priced in.

The S&P 500 rallied on Friday, breaking a three-week losing streak. The Dow Jones Industrial Average had its best day since early February. Despite a report showing resilience in the service sector, sentiment remained upbeat as some investors bet the impact of the Fed's hikes on the economy would be delayed. A measure of prices paid by service providers revealed that costs were rising at a slower rate, which traders welcomed.

Bond yields rose for the week, despite a Friday rally in treasuries, with the 10-year yield hovering around 3.96%. The dollar index had its worst week since mid-January, capping off four weeks of gains.

Next week's non-farm payrolls report will be scrutinized for clues on whether the economy can withstand further rate hikes. This week's data showed continued labor-market resilience in the United States, bolstering the case for the Fed to maintain its tightening policy, which had pushed almost every major asset into the red in February.

However, investors were encouraged after Atlanta Fed President Raphael Bostic stated on Thursday that the central bank may pause rate hikes this summer. Traders interpreted his comments as dovish, despite the fact that Bostic and his colleagues stated that decisions would remain data dependent, and a Fed report released on Friday emphasised that further rate increases are on the way.