NEW YORK The benchmark S&P 500 index closed at its highest level of the year on Friday amid growing optimism the Federal Reserve was done raising U.S. interest rates and could begin to cut them next year as inflation cools.

The index closed at 4,594.63 points, up 26.83 points, or 0.59%, and topping the close on July 31 at 4,588.96, which had been the prior high of 2023.

U.S. stocks rebounded in November following three straight months of declines on better-than-expected earnings and as evidence of easing inflation boosted bets that the Fed was at the end of its monetary tightening campaign.

On Friday the benchmark S&P 500 got another boost when Federal Reserve Chair Jerome Powell vowed to move "carefully" on interest rates, describing the risks of going too far with tightening as "more balanced" with risks of not controlling inflation.

"Markets view today’s comments as inching toward the dovish camp," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina, in an email. "A few weeks ago, Powell said policy is restrictive but today, he believes policy is 'well into restrictive territory.' I think it’s fair for markets to latch on to that subtlety."

(Reporting by Amruta Khandekar; Editing by Chizu Nomiyama and Lisa Shumaker)