By Abigail Summerville and Johann M Cherian

(Reuters) -Wall Street closed higher on Friday, with all three major indexes posting weekly gains, as investors took comfort from data pointing to robust economic activity in the world’s biggest economy.

A measure of business activity raced to a 31-month high in November, boosted by hopes for lower interest rates and more business-friendly policies from President-elect Donald Trump’s administration next year.

The domestically focused small-cap Russell 2000 index outperformed large-cap indexes and rose 1.8%. The index advanced 4.3% for the week, closing at its highest in more than a week.

Meanwhile, Alphabet fell 1.7% following Thursday’s 4% drop, as the U.S. Department of Justice argued to a judge the company was monopolizing online search.

AI bellwether Nvidia also slipped 3.2% in choppy trading following its quarterly forecast on Wednesday.

An index tracking S&P 500 value stocks rose 0.78% as investors rotated out of their growth peers.

“I’ve been looking for this leadership change to go from technology to everything else. I think we may be in the midst of that shift. Small caps are acting much better, values are acting better,” said Mark Hackett, Chief of Investment Research at Nationwide.

The Dow Jones Industrial Average rose 426.16 points, or 0.97%, to 44,296.51, the S&P 500 gained 20.63 points, or 0.35%, to 5,969.34 and the Nasdaq Composite gained 31.23 points, or 0.16%, to 19,003.65.

Industrial stocks led the S&P, rising 1.36%, while consumer discretionary was the biggest sectoral decliner, falling 0.69%.

For the week, the S&P 500 gained 1.68%, the Nasdaq rose 1.73%, and the Dow climbed 1.96%.

Expectations on the Federal Reserve’s policy move in December have recently swayed between a pause and a cut, as investors weighed the likely impact of Trump’s plans on price pressures.

There is a 59.6% probability the central bank will lower borrowing costs by 25 basis points, as per the CME Group’s FedWatch Tool.

Geopolitics were top of mind this week as investors monitored a missile exchange between Ukraine and Russia, after Moscow lowered its threshold for a nuclear retaliation. The markets are also awaiting Trump’s Treasury Secretary pick.

“The fact that we’ve been calm on a nice, steady stair step pattern higher is very encouraging and reflective of the fact that investors aren’t acting with the emotion that they could be given the amount of uncertainties we’ve faced,” Hackett said.

In company news, Gap Inc jumped 12.8% after the Old Navy parent raised its annual sales forecast and said the holiday season was off to a “strong start”.

Intuit fell 5.7% after the TurboTax parent projected second-quarter revenue and profit below Wall Street estimates on Thursday.

Advancing issues outnumbered decliners by a 3.2-to-1 ratio on the NYSE where there were 532 new highs and 41 new lows.

On the Nasdaq, 3,076 stocks rose and 1,271 fell as advancing issues outnumbered decliners by a 2.42-to-1 ratio.

The S&P 500 posted 83 new 52-week highs and one new low while the Nasdaq Composite recorded 179 new highs and 85 new lows.

Volume on U.S. exchanges was 13.49 billion shares, compared with the 14.65 billion average for the full session over the last 20 trading days.

(Reporting by Abigail Summerville in New York; additional reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by David Gregorio)

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