NEW YORK, New York - U.S. stocks rose sharply Friday as investors bet the Federal Reserve will be less aggressive in hiking interest rates in the future as inflation may be peaking.

"The hopes that the Fed may temper or take the foot off the gas pedal slightly is helping the market," Andre Bakhos, managing member at Ingenium Analytics LLC in Plainsboro, New Jersey. told Reuters Friday.

"We really need a Fed pause. Not so much that they would just outright disavow future rate hikes, but that they would just say every meeting is live, and if the data go our way, then after the first half of '23, we don't have to do more," Stifel chief equity strategist Barry Bannister said on CNBC's "Squawk on the Street."

Friday's price action is a breakthrough compared to the week's end over the past two months. "If rainy days and Mondays get you down how about those Fridays? As the week began, eight of the last nine Fridays saw lower closes," CNBC reported Wellington Shields analyst Frank Gretz as saying in a note.

"The consistent Friday weakness is one thing; more striking is the extent of the weakness. From August 18 through this past Friday, the Dow had lost a total of almost 4400 points. Of that, some 3500 points, or almost 80 percent, came on Fridays. So much for TGIF," Gretz said.

It was a different story this Friday, with the Dow Jones surging 748.97 points or 2.47 percent to 31,082.36.

The tech-laden Nasdaq Composite jumped 244.87 points or 2.31 percent to 10,859.72.

The Standard and Poor's 500 increased 86.97 points or 2.37 percent to 3,752.75.

There was plenty of action on currency markets on Friday. The biggest mover was the Japanese yen which appeared to be the target of central bank intervention, although the Bank of Japan refused to comment. "It looks like the Ministry of Finance is intervening here. We are seeing lots of dollar selling and the yen moving almost vertically as shorts get squeezed," Karl Schamotta, chief market strategist at Corpay in Toronto, told Reuters Friday.

"We are hearing large blocks are being traded. That typically means either larger institutions are moving money or that a central bank is intervening in size. The clearest evidence is just the scale of dollar selling that is happening."

After hitting a multi-decade low of 151.90, the yen dramatically rose to a high of 146.19 before settling at 147.65 around the New York close. The move sparked interest in a broad range of currencies that trade against the yen. The euro jumped to 0.9861. The British pound rose to 1.1302. The Swiss franc firmed to 0.9979.

The Canadian dollar rose to 1.3638. The Australian and New Zealand dollars were sharply higher at 0.6389 and 0.5766, respectively.

Internationally, stocks rose in London and Shanghai but were on a downward slope elsewhere.

The FTSE 100 climbed 25.82 points or 0.73 percent to 6,969.73.

The German Dax lost 36.51 points, or 0.29 percent, to close Friday at 12,730.90.

In Paris, France, the CAC 40 declined 51.51 points or 0.85 percent to 6,035.39.

In Japan, the Nikkei 225 retreated 116.38 points or 0.43 percent to 26,890.58.

The Australian All Ordinaries dropped 48.80 points or 0.71 percent to 6,869.90.

In New Zealand, the S&P/NZX 50 shed 49.67 points or 0.46 percent to 10,782.36.

South Korea's Kospi Composite slipped 6.34 points or 0.29 percent to 10,782.36.

In Hong Kong, the Hang Seng, declined 68.10 points or 0.42 percent to 16,211.12.

China's Shanghai Composite, going against the trend in Asia, edged up 3.88 points or 0.13 percent to 3,038.93.