US stocks turn higher on optimism that inflation will cool further and allow the Fed to ease tightening
Kolderal via Getty Images
- US stocks closed higher on Tuesday after showing weakness in early trading.
- A note from JPMorgan gave investors hope that December inflation could come in around consensus expectations.
- That led to investor optimism that the Federal Reserve could ease its tightening campaign further.
US stocks closed higher Tuesday as optimism grew that inflation will continue cooling and give the Federal Reserve more room to ease its tightening campaign.
JPMorgan analysts said the most likely scenario for Thursday's December consumer price index report is for the reading to come in around consensus estimates. And that would lead to a 2% surge in stocks, the predicted.
Such sentiment overcame relatively hawkish comments from Federal Reserve Chair Jerome Powell, who said at a conference in Stockholm that bringing inflation back down to a 2% target would require "measures that are not popular in the short term as we raise interest rates to slow the economy."
"The expectation with this week's Consumer Price Index is for further easing of inflation pressures. Anything less than broad-based improvement will rattle investors' nerves and keep the Fed active," said Greg McBride,
chief financial analyst at Bankrate.
Here's where US indexes stood at the 4:00 p.m. closing bell on Tuesday:
- S&P 500: 3,919.25, up 0.70%
- Dow Jones Industrial Average: 33,704.10, up 0.56% (186.45 points)
- Nasdaq Composite: 10,742.63, up 1.01%
Here's what else is going on:
- FTX bankruptcy documents show the list of investors set to be completely wiped out include NFL legend Tom Brady and New England Patriots owner Robert Kraft.
- Tesla stock has more downside ahead and investors can expect a 25% drop in earnings in the coming quarter amid price cuts, Loup's Gene Munster said.
- Bitcoin bull Mike Novogratz thinks 2023 will be a recovery period for crypto.
- Investors should be prepared for uncertainty as a looming recession will take precedence over inflation, according to Mohamed El-Erian.
In commodities, bonds, and crypto:
- Oil prices gained, with West Texas Intermediate up 0.89% to $75.29 a barrel. Brent crude, the international benchmark, rose 0.58% to $80.11 a barrel.
- Gold edged up 0.2% to $1,882 per ounce.
- The 10-year yield jumped 9.8 basis points to 3.615%.
- Bitcoin climbed 0.28 % to $17,463.78.