Stocks rose in a broad-based rally Friday, as investors bought beaten-down stocks and a positive indicator on the economy emerged.
The S&P 500 rose as much as 0.6%, with the tech-heavy Nasdaq up as much as 0.9%. The 10-Year Treasury yield rose to 0.68%.
Consumer price inflation was 0.4% in August, beating estimates of 0.3%.
"US consumer price inflation could be one to watch in the context of the new Fed policy of allowing periods of higher inflation,” wrote Jasper Lawler, head of research at London Capital Group.
This comes after a beat of the producer price index inflation reading Thursday, even though stocks did sell-off Thursday as other economic data were poor. As for the positive inflation read, the market welcomes inflation right now, as it is a sign of firming economic demand while the Federal Reserve is certain to keep interest rates ultra low for some time.
There has been a mixed picture on the speed of the economic recovery in recent weeks, but the selling recently — not just in tech but also in other sectors — is bringing valuations down to tolerable levels compared to interest rates.
Friday cyclical sectors like consumer discretionary and banks were up, although for the first time since the sell-off began last week, value is back to underperforming growth tech.
Tech stocks rose, as investors once again began to buy the dip — the Nasdaq is down more than 8% since last Wednesday's close still. Some investors are in the midst of reassessing valuations as at-home service like cloud, e-commerce and streaming sees a potential massive pull-forward of demand in 2020, taking the juice out of later years in a valuation Oracle (ORCL) - Get Report rose 6% after beating earnings estimates.
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