Stocks rally on Tuesday, building on their strong November gains, as Wall Street cheers new U.S. inflation data that raises hope of the Federal Reserve wrapping up its rate-hiking campaign.
CPI was flat this month, while economists polled by Dow Jones expect a gain of 0.1% month over month. So-called core CPI, which strips out food and energy prices, was also lower than expected and the slowest in two years. This instils optimism into the market that the Federal Reserve could finally end its rate-hiking campaign for good.
Following the report, fed-funds futures show traders have removed any chance of a hike in December, from 14% odds prior.
The Dow Jones Industrial Average jumps 527 points, or 1.5%. The S&P 500 rallies 2%, briefly trading above the key 4,500 level. The Nasdaq Composite also trades 2.3% higher.
Tuesday’s gains add to an already stellar performance this month for stocks. The S&P 500 and Dow are up 7.3% and 5.5%, respectively, in November. The Nasdaq is up 9.6%, on pace for its biggest one-month gain since January.
Leading the equity rally Tuesday is the Technology Select Sector SPDR Fund, which tracks the tech stocks in the S&P 500. The fund hits a record led by Microsoft as investors return to the sector that has been one of the hardest hit by rate hikes. Shares of Tesla gain more than 4%.
Bank stocks such as Bank of America and Wells Fargo jump on the hope that the economy could skirt a recession. Shares of Home Depot, which are up nearly 6% on better-than-expected third-quarter earnings, lead the gains for the Dow. Enphase Energies, Boston Properties, and SolarEdge Technologies — each up more than 9% — lead the S&P higher.
In commodity news, Glencore will acquire a majority stake in Teck Resources Ltd.'s coal business for $6.93 billion, marking a strategic move to exit the thermal coal industry and concentrate on metals for the energy transition. They plan to create a new company for the combined coal operations on the New York Stock Exchange within two years. Pending Canadian government approval, the deal implies an enterprise value of $9 billion for Teck's coal business.
Iron ore spot prices are nearing $130 US dollars a tonne. This is the highest level since March 2023.
The recent improvement in China's property sector has led to an increase in commodities prices. This fosters optimism that China may increase infrastructure investments as part of its efforts to stimulate the economy, given the significant impact of both sectors on steel demand.
Currency
One Australian dollar at 7:35 AM was buying 65.12 US cents.
Figures around the globe
European markets closed higher. London’s FTSE added 0.20 per cent, Frankfurt gained 1.76 per cent, and Paris closed 1.39 per cent higher.
Turning to Asian markets, Tokyo’s Nikkei added 0.34 per cent, Hong Kong’s Hang Seng fell 0.17 per cent while China’s Shanghai Composite closed 0.31 per cent higher.
The Australian share market closed 0.83 per cent higher at 7007.
Ex-dividends
Dicker Data (ASX:DDR) is paying 10 cents fully franked
Plato Inc Max (ASX:PL8) is paying 0.55 cents fully franked
Dividends payable
Waypoint REIT (ASX:WPR)
Autosports Group (ASX:ASG)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
