Wall Street grinds out gains as investors digest mixed data

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"It shows the volatility is getting priced out of the market". All of that helped stocks build on the market's gains from late on Friday.

Goldman Sachs analysts said the current market turbulence poses only a "modest" risk to their "optimistic" view on the global economy.

Investors anxious that strong rise in inflation would push the Federal Reserve to raise interest rates as many as three times later this year. That builds on a recent spike in wage growth, which triggered concerns about inflation returning to the economy.

"The catalyst behind this bull market up until maybe the previous year or so has just been the ability of this economy to grow, even if it's very sluggishly (.) without creating any negative consequences for the financial markets", he said.

Output price inflation eased to 2.8 percent in January from 3.3 percent a month ago, while the house price index climbed 5.2 percent year-over-year in December, faster than the 5.0 percent rise in November, separate reports showed.

The Standard & Poor's 500, the benchmark for many index funds, gained 36.45 points, or 1.4%, to 2,656.

Asian stocks closed broadly higher on Tuesday after the major US averages rose between 1.4 percent and 1.7 percent overnight to rebound from their worst weekly performances in two years. That was a big change after the market's inflation-inspired plunge earlier this month.

The Toronto Stock Exchange's S&P/TSX composite index ended down 25.41 points, or 0.17 per cent, at 15,216.47.

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Australian shares bounced back in thin trade after Wall Street's three major averages rose for the second day on Monday. According to LPL Financial, it was the swiftest move from a record high to a correction in the history of the S&P 500. The tech-heavy Nasdaq is up 1.6 percent in 2018.

That comes after a remarkably calm year for stocks as there were only eight days in 2017 where the S&P 500 rose or fell at least 1%.

The CBOE Volatility index, known as Wall Street's fear gauge, whose impact on funds using computer-driven trading strategies is also seen as a contributing factor to the selloff, eased to a week low of 22.81, after shooting above 50 points in the peak of last week's falls. Markets in mainland China, South Korea and Taiwan were closed for the lunar new year holiday.

Other gainers in the technology industry included Cisco Systems, which rose 1.07 dollars, or 2.7%, to 40.60 dollars. Chipmakers Broadcom and Qualcomm each climbed after CNBC reported that the companies will meet this week to discuss Broadcom's $121 billion offer to buy Qualcomm.

Underpinning confidence among many investors is the belief that the USA economy remains strong and that tax cuts enacted this year will spur corporate earnings and lead consumers to spend more.

In other energy trading, wholesale gasoline fell 2 cents to $1.68 a gallon.

Japan's benchmark Nikkei 225 rose 1.3 percent to 21,435.13 and Hong Kong's Hang Seng advanced 1.3 percent to 30,908.64.