Stocks climbed while bond yields tumbled as an unexpected inflation slowdown bolstered bets the Federal Reserve’s aggressive hiking cycle is now over — and the next move will be a rate cut next year.
The S&P 500 rose nearly 2%, the most since April. Tesla Inc. led gains in megacaps and Nvidia Corp. rallied for a 10th straight session. Regional banks jumped almost 6%. The Russell 2000 index of small caps added over 5%. Goldman Sachs Group Inc.’s basket of the most-shorted stocks beat the broader market in a sign some traders are preparing to cover bearish wagers. Two-year yields plunged over 20 basis points. The dollar fell 1.2%.