(Bloomberg) — Wall Street traders gearing up for key inflation data sent stocks to fresh all-time highs. Treasuries saw mild losses while the dollar headed toward its longest winning run in more than two years.
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Less than 24 hours before data that’s expected to show consumer prices continued to moderate, the S&P 500 approached 5,800. Banks led gains as investors geared up for the start of the earnings season on Friday. Microsoft Corp. drove megacaps higher. Tesla Inc. fluctuated ahead of the Robotaxi launch. Alphabet Inc. fell 1.6% on news the US is weighing a Google breakup in a historic big-tech antitrust case.
Major technology stocks have undergone volatility in both directions of late, but weakness represents an attractive buying opportunity, according to Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management.
“We remain positive on the tech sector as well as the outlook for artificial intelligence,” and “against this backdrop, we believe volatility should be utilized to build long-term AI exposure,” she said.
Investors also awaited minutes from the latest Federal Reserve gathering while sifting through remarks from central bank speakers. Fed Bank of Dallas President Lorie Logan said she supports a slower path of rate reductions as the central bank normalizes policy away from its highest level in more than 20 years.
The S&P 500 rose 0.7%. The Nasdaq 100 added 0.7%. The Dow Jones Industrial Average gained 0.9%.
The yield on 10-year Treasuries advanced four basis points to 4.05%. The Bloomberg Dollar Spot Index rose 0.3%. Oil fell as US crude inventories swelled and traders monitored China’s plans for fiscal policy.
While Saturday marks the two-year anniversary of the bull-market run in US stocks, a crucial piece of the current rally that’s been missing for much of the past few years — broader breadth — may juice the next leg higher for share gains.
Large caps and growth shares have historically outperformed in the third year of a bull market, but they are currently overbought versus small-cap companies and value equities, according to Ed Clissold, chief US strategist at Ned Davis Research.
For the bull run to continue, inflation needs to continue to ebb, the economy needs to make a soft-landing and corporate America’s earnings growth needs to remain strong and broaden, he said.
US inflation probably moderated at the end of the third quarter, reassuring a Fed that’s shifting more of its policy focus toward shielding the labor market.
The consumer price index is seen rising 0.1% in September, its smallest gain in three months. Compared with a year earlier, the CPI probably rose 2.3%, the sixth-straight slowdown and the tamest since early 2021. The Bureau of Labor Statistics will issue its CPI report on Thursday.
“The Fed’s decision to shift its focus from inflation to the labor market means that inflation data, including tomorrow’s CPI report, is likely to become less market-moving than it had been,” said Matthew Weller at Forex.com and City Index. “Despite that logical observation, this month’s CPI report may still lead drive market volatility coming on the back of Friday’s stellar jobs report, a reading that hints at the potential for renewed upside risks to inflation.”
The rally that’s helped US stocks almost double in value over the past five years is tapering off, and investors should expect low but positive returns on their investments, according to Bill Gross. The billionaire investor recommends keeping exposure to the stock market at average levels, while focusing portfolios more on defensive stocks with a small position in bonds.
“No bear market, but it’s not the same bull market anymore,” Gross, the co-founder and former chief investment officer of Pimco, wrote.
Corporate Highlights:
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Tesla Inc. enjoyed its best-ever quarter for China shipments, as vehicles delivered from its Shanghai factory rose for a third consecutive month.
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The crisis engulfing Boeing Co. took a dramatic turn after negotiations to resolve an almost monthlong strike collapsed and S&P Global Ratings warned it may cut the planemaker’s credit grade to junk.
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Taiwan Semiconductor Manufacturing Co. posted a better-than-expected 39% rise in quarterly revenue, assuaging concerns that AI hardware spending is beginning to taper off.
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Rio Tinto Group has agreed to buy Arcadium Lithium Plc in an all-cash deal valuing the US-listed miner at $6.7 billion, expanding its grip on the battery metal and stepping back into the M&A fray with its biggest deal in 17 years.
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Generac Holdings Inc. is running low on portable backup generators after Hurricane Helene and other recent storms knocked out power for millions of Americans.
Key events this week:
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US CPI, initial jobless claims, Thursday
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Fed’s John Williams and Thomas Barkin speak, Thursday
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JPMorgan, Wells Fargo kick off earnings season for the big Wall Street banks, Friday
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US PPI, University of Michigan consumer sentiment, Friday
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Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.7% as of 12 p.m. New York time
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The Nasdaq 100 rose 0.7%
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The Dow Jones Industrial Average rose 0.9%
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The Stoxx Europe 600 rose 0.7%
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The MSCI World Index rose 0.6%
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S&P 500 Equal Weighted Index rose 0.8%
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Bloomberg Magnificent 7 Total Return Index rose 0.2%
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The Russell 2000 Index rose 0.8%
Currencies
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The Bloomberg Dollar Spot Index rose 0.3%
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The euro fell 0.3% to $1.0951
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The British pound fell 0.2% to $1.3078
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The Japanese yen fell 0.7% to 149.26 per dollar
Cryptocurrencies
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Bitcoin was little changed at $62,301.12
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Ether rose 0.7% to $2,457.93
Bonds
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The yield on 10-year Treasuries advanced four basis points to 4.05%
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Germany’s 10-year yield advanced two basis points to 2.26%
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Britain’s 10-year yield was little changed at 4.18%
Commodities
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West Texas Intermediate crude fell 0.7% to $73.04 a barrel
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Spot gold fell 0.3% to $2,613.54 an ounce
This story was produced with the assistance of Bloomberg Automation.
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