By Chuck Mikolajczak
NEW YORK (Reuters) -Global stocks rose on Tuesday and were on pace for a third straight session of gains, as investors remained optimistic the U.S. Federal Reserve would cut interest rates at its December meeting, while the U.S. dollar eased.
On Wall Street, the S&P 500 and Nasdaq were lower in the early stages of trading, weighed down by a drop in Nvidia, although declines were curbed somewhat by gains in Google parent Alphabet.
Investors were also sifting through a flurry of economic data, some of which was delayed due to the 43-day U.S. government shutdown.
Retail sales rose 0.2% in September after an unrevised 0.6% gain in August, the Commerce Department said, short of the 0.4% rise expected by economists polled by Reuters.
A separate report from the Labor Department showed the Producer Price Index for final demand increased 0.3% after an unrevised 0.1% drop in August, which matched expectations, as the cost of energy goods surged and producers passed on some tariffs.
“The shutdown didn’t help the trend that has been forming of softer consumer spending. The inflation picture has changed more than the consumer spending picture has,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
“With tariff exemptions for a lot of food products and the détente between the U.S. and China, the adjustment of prices to the new tariff reality may not be over, but it may be closer to the end than to the beginning.”
The Dow Jones Industrial Average rose 133.69 points, or 0.29%, to 46,581.96, the S&P 500 fell 8.10 points, or 0.12%, to 6,697.02 and the Nasdaq Composite fell 120.05 points, or 0.52%, to 22,751.96.
Trading volume is likely to dwindle towards the U.S. Thanksgiving holiday on Thursday, when markets will be closed and have an abbreviated session on Friday.
Alphabet hit an intraday record high of $328.60 and was last up about 3% as it approached $4 trillion in market capitalization, which would make it only the fourth company to reach that mark. The Information reported that Meta Platforms was in talks with Google to spend billions of dollars on the Alphabet-owned company’s chips for use in its data centers starting from 2027.
Equities have been rallying since Friday after New York Fed President John Williams said interest rates can fall in the near term even as other policymakers insisted borrowing costs should remain steady for now, which boosted market expectations for a rate cut. Those expectations were further juiced on Monday after comments from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller in support of a December cut.
MSCI’s gauge of stocks across the globe rose 1.73 points, or 0.18%, to 984.04, while the pan-European STOXX 600 index rose 0.76%.
U.S. yields were lower after the glut of data, with the yield on benchmark U.S. 10-year notes down 2.5 basis points to 4.011%.
Markets are pricing in an 84.9% chance for a 25 basis-point cut from the Fed at its December meeting, up slightly from the 84.4% in the prior session and well above the 50.1% from a week ago.
Federal Reserve Governor Stephen Miran said in a television interview that a deteriorating job market was happening because of where the central bank has set its short-term interest rate target.
More recent data on Tuesday from ADP said U.S. private employers shed an average of 13,500 jobs during the four weeks ending Nov. 8.
In currencies, the dollar index, which measures the greenback against a basket of currencies, fell 0.41% to 99.79, with the euro up 0.45% at $1.1572.
Sterling strengthened 0.6% to $1.3182 ahead of Britain’s upcoming budget announcement on Wednesday, while traders piled into the options market seeking protection against heightened volatility.
Traders have been closely watching for signs of possible Japanese intervention in the yen, which strengthened 0.55% against the greenback to 156.05 per dollar but is down 1.3% for the month.
U.S. crude fell 2.72% to $57.24 a barrel and Brent fell to $61.78 per barrel, down 2.51% after news reports cited a U.S. official saying that Ukraine had agreed to a peace deal.
(Reporting by Chuck Mikolajczak; additional reporting by Scott Murdoch in Sydney and Amanda Cooper in LondonEditing by Frances Kerry and Nick Zieminski)
