Wall Street’s benchmark S&P 500 had climbed 0.8 percent by mid-afternoon in New York, paring earlier gains, while the tech-heavy Nasdaq Composite was 1.5 percent higher. The S&P 500 gained nearly 14 percent from its intraday low in the second week of October. Tuesday’s gains followed a report showing U.S. producer prices rose 0.2 percent in October from September, compared with expectations in a Bloomberg poll of 0.4 percent. The annual rate of wholesale inflation rose to 8 percent, up from 8.5 percent in September. “These figures are further confirmation that inflation has peaked for now, evidence we have been seeing for months,” said Peter Boockvar, chief investment officer at Bleakley Financial Group. The slowdown in factory-gate prices comes after a report last week showed U.S. consumer inflation also eased, raising some investors’ hopes that the Fed will slow its monetary policy tightening, which has boosted the dollar and burdened the shares. U.S. government bond markets edged higher — the yield on two-year U.S. Treasuries fell 0.03 percentage points to 4.38 percent. The yield on the benchmark 10-year US note fell 0.05 percentage point to 3.82%. Returns fall when prices rise. But some analysts believe investors have become unduly bullish on recent gains in Wall Street stocks. “Daily S&P 500 returns of more than 2 percent tend to be more common during bear markets,” said analysts at Goldman Sachs, who believe the recent rally in bonds and risk assets was “likely overdone.” . “The larger-than-expected rebound in inflation may support a slowdown in the rate of hiking, but risks of an extension of the hiking cycle remain,” the bank added. Fed Vice Chairman Lael Brainard said on Monday that a slower pace of interest rate hikes does not mean the central bank is scaling back its efforts to tackle historically high inflation. “We’ve done a lot, but we have additional work to do both on raising interest rates and maintaining restraint to bring inflation down to 2% over time,” he said, adding that while the better-than-expected data for October inflation they were “reassuring”. , it was only “preliminary”. The debate over whether the latest rally for stocks is the start of a true rally or just a bear market rally is largely redundant in the absence of new economic news, said Mike Zigmont, head of trading and research at Harvest Volatility Management. “Let’s just accept that investors are confused, but also not afraid,” Zigmont added. “They just got a huge dose of relief [from the latest CPI data] and now they are acclimatizing to the new environment.” Recommended Bank of America’s latest Global Fund Manager survey, meanwhile, revealed that 92 percent of respondents predicted a period of stagflation — low growth and high inflation — in 2023. Asian markets also posted strong gains after Xi Jinping and Joe Biden signaled a desire to improve US-China relations at a meeting on Monday ahead of the G20 summit in Indonesia and Beijing moved to ease some pandemic restrictions. Hong Kong’s Hang Seng rose 4.1 percent, up a quarter from its low in late October. China’s CSI 300 gained 1.9 percent, while Japan’s Topix rose 0.4 percent and South Korea’s Kospi rose 0.2 percent. The regional Stoxx Europe 600 rose 0.4%, while London’s FTSE fell 0.2%.
