Wall Street gained conviction that plodding growth would cement a third Federal Reserve easing this year, keeping buyers in control for the third straight session.
Several economic indicators contributed to a bad-news-is-good-news scenario that helped convert an overnight pullback into another solid rally, even as Thursday's Thanksgiving holiday threatened to drain market liquidity and volume.
All three major stock indexes strengthened. The blue-chip Dow took the lead while sagging shares of artificial intelligence front-runner Nvidia limited the Nasdaq's advance even as Google parent Alphabet rose to a record high, closing in on becoming the fourth company to reach $4 trillion in market capitalization. Meta was the biggest boost to the S&P 500 after The Information reported it was in talks with Google to spend billions on its chips for data centers.
U.S. retail sales increased a less-than-expected 0.2% in September, suggesting consumer fatigue amid higher prices due to tariffs going into the shutdown that delayed government reports for that month and the next. Meanwhile, labor market worries pushed down the Conference Board's consumer confidence index to 88.7 this month, the lowest level since April. The Labor Department also reported that its September Producer Price Index rebounded 0.3%, after a slight drop in August, due to higher energy and food costs.
Following comments from three Fed officials since Friday, futures traders stepped up bets that the central bank would cut its fed funds target range another 25 basis points to 3.50% to 3.75% after its December 9-10 meeting, putting the probability at 76% -- not as certain as a couple of weeks ago, when they priced in near certainty, but more confident than during last week's shakeout. Treasury yields fell on the underwhelming data and prospects for still more monetary policy accommodation, which also weighed on the dollar.
