Stocks drifted to a mostly higher close Tuesday following a strong report on consumer confidence and growing hopes that the Federal Reserve is finished with its aggressive interest rate hikes.
- The S&P 500 rose 4.46 points, or 0.1%, to 4,554.89.
- The Dow Jones Industrial Average rose 83.51 points, or 0.2%, to 35,416.98.
- The Nasdaq composite climbed 40.73 points, or 0.3%, to 14,281.76 ..
Treasury yields fell after Christopher Waller, a member of the Federal Reserve's Board of Governors, said he was 'increasingly confident' that the Fed could get inflation back down to its 2% target.
The S&P 500 remains on track to close out November with its strongest monthly gain of the year. Investors are closely watching several economic updates this week for more clues about how consumers feel and whether the rate of inflation is still easing. They are betting that the Fed will continue to hold its benchmark rate steady. That sentiment was reaffirmed Tuesday by Waller, the AP reports. "I am increasingly confident that policy is currently well-positioned to slow the economy and get inflation back to 2%," he said in a speech at the American Enterprise Institute, a Washington think tank. The Fed will meet again in December to update its interest rate policy
The central bank has been working to lower rates while trying to avoid a recession in what is referred to as a "soft landing" for the economy. The latest economic data adds to hopes for that outcome. Consumer confidence remains strong heading into the holiday shopping season. The Conference Board's November consumer confidence survey released Tuesday topped analysts' forecasts. Consumer spending accounts for around 70% of US economic activity and it has remained a bulwark against slower economic growth. "Signs of a resilient consumer keep a soft landing possibility in play," says Ed Clissold, chief US strategist at Ned Davis Research.
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On Thursday the government releases its October data on the Fed's preferred measure of inflation. Economists expect that measure to continue easing, as it has been since the middle of 2022. The loosening grip from inflation and a resilient economy have raised hopes that the Fed might finally be finished with raising its benchmark interest rate. That has helped fuel a rally on Wall Street. Every major index is headed for a solid November gain. "The challenge has been that, related to bonds, stocks are fairly expensive," Clissold says. "Now, with yields coming down, that's no longer the case."
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