U.S. stocks rose as fresh data added to evidence inflation may have peaked, strengthening the case for the Federal Reserve to moderate its pace of interest-rate hikes. Treasuries also ended Tuesday higher while the dollar fell.

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The S&P 500 climbed 0.9 per cent  and the tech-heavy Nasdaq 100 closed at its highest level since Sept. 19. While equities soared for most of Tuesday’s session, it gave back some of its gains after an Associated Press report citing an unidentified U.S. intelligence official said that Russian missiles landed in NATO-member Poland. 

Commodities from oil to corn also jumped on geopolitical worries from Europe. While Poland later said an explosion near its eastern border with Ukraine killed two people, it didn’t confirm the Associated Press report. 

Markets have turned risk-on in recent days, trading off a softer-than-expected U.S. consumer price index reading that many reckon will allow the Fed to raise rates in half-point increments. While a slew of Fed speakers in recent days indicated that officials could slow their tempo, they also emphasized the central bank has more work to do to tame inflation. 

On Tuesday, the producer price index for October came in at 8 per cent  year-on-year, undershooting the 8.3 per cent  estimate and further easing inflation concerns.  

Still, some investors are not convinced the recent data will do much to move the Fed.

“Markets appear to be pricing in a best case scenario of a soft landing and falling inflation triggering a Fed pause,” Venu Krishna, head of U.S. equity strategy at Barclays Plc. “In our view, this is not a given and remains a low probability scenario – these are just a few data points on inflation and it needs to be sustained. Even if the Fed eventually pauses, it might not be able to prevent a shallow recession.”

Key events this week:

• U.S. business inventories, cross-border investment, retail sales, industrial production, Wednesday
• Fed’s John Williams, Lael Brainard and SEC Chair Gary Gensler speak, Wednesday
• ECB President Christine Lagarde speaks, Wednesday
• Eurozone CPI, Thursday
• U.S. housing starts, initial jobless claims, Thursday
• Fed’s Neel Kashkari, Loretta Mester speak, Thursday
• U.S. Conference Board leading index, existing home sales, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.9 per cent  as of 4 p.m. New York time
• The Nasdaq 100 rose 1.5 per cent
• The Dow Jones Industrial Average rose 0.2 per cent
• The MSCI World index fell 0.6 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.3 per cent
• The euro rose 0.3 per cent  to US$1.0353
• The British pound rose 0.9 per cent  to US$1.1863
• The Japanese yen rose 0.5 per cent  to 139.21 per dollar

Cryptocurrencies

• Bitcoin rose 2.6 per cent  to US$16,816.92
• Ether rose 2.1 per cent  to US$1,251.32

Bonds

• The yield on 10-year Treasuries declined seven basis points to 3.78 per cent
• Germany’s 10-year yield declined four basis points to 2.11 per cent
• Britain’s 10-year yield declined seven basis points to 3.29 per cent

Commodities

• West Texas Intermediate crude rose 0.9 per cent  to US$86.67 a barrel
• Gold futures rose 0.3 per cent  to US$1,782.70 an ounce