Major indices in the U.S. stock market experienced a gain on Tuesday following the recent publication of the latest inflation data.
The Dow Jones Industrial Average concluded the trading day at 33,592.92, rising 56.22 points or 0.17 percent. The S&P 500 closed at 3,991.73, gaining 34.48 points or 0.87 percent.
Meanwhile, the Nasdaq Composite ended the day at 11,358.41, climbing by 162.19 points or 1.45 percent. On Monday, the Dow was the only major index seeing a gain.
Analysts said the October price index, which showed an eight percent raise against an initial projection of 8.3 percent, made investors hope for a dovish policy by the Federal Reserve soon.
"The market has been driven by the inflation number that came out a little bit lower than expected and confirmed last week's number to some degree that we may have rounded the corner on inflation," Chase Investment Counsel president Peter Tuz said.
Several major companies also reported their earnings on Tuesday, contributing to gains in the stock market. Walmart shares rose by 6.5 percent after the retail company increased its annual sales and profits projections due to the high demand for groceries.
Two other retailers, Target and Costco, also gained 3.9 percent and 3.3 percent, respectively. Home Depot shares rose by 1.6 percent after announcing a price increase following a drop in transactions during the Q3.
Tuz pointed out that the Dow Jones briefly trended into negative territory following news of increased tension between Russia and Ukraine. According to reports, Russian missiles caused a blast in the Polish village of Przewodow near the border with Ukraine. Two people were reportedly killed in the incident.
Interactive Brokers chief strategist Steve Sosnick said the geopolitical tension could “develop into something far worse.” However, Sosnick added that the market was merely “nervous” instead of “panicked.”
Investors are waiting for the retail sales report on Wednesday. This data will offer an outlook on consumer spending amid a high inflation rate.
Dow Jones predicted that there would be a 1.2 percent increase in the yearly retail sales for October. Retail sales in October, except for automobiles, are projected to rise by 0.6 percent, compared to the 0.1 percent increase in September.
Optimism in U.S.-China relationship
Analysts noted rising optimism in the relationship between the U.S. and China following President Joe Biden and Chinese leader Xi Jinping’s face-to-face meeting in Bali.
The two global economic powerhouses saw rising tensions in the past few years. For example, the U.S. recently banned its tech companies from selling certain microchips to China.
Chinese foreign minister Wang Yi explained that the meeting was “both a continuation of exchanges up to now, and augurs a new starting point.” He added that the U.S. and China needed to manage their differences.
Despite the positive outlook on the relationship, Wang maintained that Taiwan could potentially cause another crisis between the U.S. and China. The U.S. has always acknowledged the “one China” policy but does not guarantee that it will accept China’s claim over Taiwan.
Wang warned that the Biden administration needed to stop interfering with the internal affairs and interests of China.