Cooler inflation keeps stocks up, dollar and yields down

economictimes.indiatimes.com:

stocks rose again and global stock markets hit new highs for 2023 on Thursday, while the dollar and Treasury yields continued to slide, as hopes that slowing U.S. inflation will persuade the Federal Reserve to hit the pause button on interest rate hikes after this month. Wall Street's main stock indexes built on Wednesday's sharp gains after data showed that consumer prices rose modestly in June, registering the smallest annual increase in more than two years.

Investors also digested fresh data on Thursday showing that U.S. producer prices barely rose in June, an unexpected decline in U.S. jobless claims, and a drop in Chinese exports.

The Dow Jones Industrial Average rose 0.31%, to 34,455.61, the S&P 500 gained 0.57%, to 4,497.56 and the Nasdaq Composite added 0.96%, to 14,052.38. Bets that the Fed could soon end its monetary tightening campaign also sent the dollar to its lowest since April 2022, and pushed the yield on two-year U.S. Treasury notes to a nearly four-week low.

Interest rate futures showed markets have fully priced in another rate hike from the Federal Open Market Committee (FOMC) later this month, but expectations of any further increases have faded. The softer dollar helped gold prices advance to near one-month highs, while oil prices hovered above $80 a barrel. The MSCI All Country stock index was up 0.87%, hitting a new high for the year.

It is up 14.7% so far in 2023, though still not wiping out all of the near 20% loss in 2022. Stocks and bonds in Asia rallied in response to the U.S. inflation news, while in Europe, the STOXX index added 0.7% to Wednesday's gains, bringing its advance for the year to around 8.7%.