Stocks extended their November gains on speculation the Federal Reserve will be able to achieve a soft landing as the U.S. economy remains fairly resilient and inflation shows signs of cooling.

The S&P 500 topped 4,500 — though it rose at a slower pace relative to the previous session, when equities were turbocharged by short covering and bets the Fed’s hikes are over. Retailer Target Corp. soared on solid earnings, while Nvidia Corp. halted a 10-day rally. In late trading, Cisco Systems Inc. sank on a disappointing forecast. Treasuries fell, with traders reloading bearish bets after global bonds came close to erasing their 2023 slide.

Wall Street waded through a batch of economic data for clues on the outlook for the Fed’s next steps. Retail sales slowed in October and prior months were revised higher — suggesting some resiliency going into the holiday season. Prices paid to U.S. producers unexpectedly declined by the most since April 2020.

“We got more Goldilocks today,” said David Russell, global head of market strategy at TradeStation. “Price growth is moderating, but with strong demand on the sidelines. The soft landing is taking shape.”

This month’s rally in equities has driven the S&P 500 closer to its record on a total return basis, reached in January 2022. In the year after a new all-time high has been made — following an extended period without a new high — the gauge rose nine out of 10 times, according to data compiled by Bespoke Investment Group.

Goldman Sachs Group Inc.’s David Kostin became the latest Wall Street strategist to come out with a bullish call. A supportive mix of factors awaits U.S. stocks, with the economy set to avoid a recession, earnings rising and valuations remaining steady, he wrote.

“At this time next year, portfolio managers will look back and realize the best investment strategy for 2024 was to follow Taylor Swift’s advice in the song from her 1989 album: ‘All You Had To Do Was Stay’ – invested,” Kostin said. The song “reflects our baseline forecast that despite intermittent volatility, fund managers will ultimately be rewarded for staying invested through the end of next year.”

The S&P 500 staged a trend-line breakout over the past few sessions, and this can “tee up a retest of the 2023 highs within the low-4,600+ zone”, said Dan Wantrobski at Janney Montgomery Scott.

“Keep in mind that the index is now pressing into overbought territoryn and thus is likely to see some profit-taking/consolidation ahead,” he noted.

To Anthony Saglimbene at Ameriprise Financial, there’s an “entrenched disinflation trend,” and stocks are reacting positively to that because it likely means the Fed is done raising rates.

Given the strong consumer, it is only reasonable to assume that corporate profits will continue to grow — adding fuel to the fire for the year-end rally, according to Chris Zaccarelli at Independent Advisor Alliance.

“We have continued to stay long equities, despite the recent pullback — and have been adding duration in fixed income since Treasuries hit 5 per cent, and we believe that the year-end rally will broaden out,” he noted.

Meantime, Treasuries retreated Wednesday in a move that was less a direct response to the economic data — and more a function of relief that consumption wasn’t further undermined by the labor-market softening, according to Ian Lyngen at BMO Capital Markets.

The bond market is at risk of leaning too heavily toward rate cuts next year as “the inflation problem is far from being solved,” according to Daniel Ivascyn, chief investment officer at Pacific Investment Management Co. 

T. Rowe Price says bets on Fed easing next year are overblown, and expects growth in the U.S. and higher interest rates versus other major economies to support the dollar. Fidelity International sees those higher-for-longer U.S. interest rates risking dragging the economy into a downturn that would benefit the greenback.

Elsewhere, oil fell after a government report showed swelling U.S. crude inventories.

Corporate Highlights:

• Cybersecurity firm Palo Alto Networks Inc. missed Wall Street estimates for billings and lowered its estimates for the full year.
• Goodyear Tire & Rubber Co. said it will seek a new chief executive officer, cut costs and weigh options for several business lines as part of a sweeping overhaul under pressure from activist Elliott Investment Management.
• SpaceX received approval for the second launch of its groundbreaking Starship rocket, ending an almost seven-month hiatus and inching Elon Musk closer to his goal of sending humans to the moon and beyond.
• ValueAct Capital has built a stake in Walt Disney Co., a person with knowledge of the matter said, adding more activist pressure to the U.S. media and entertainment giant as it battles historic shifts in its industry.
• Sanofi is working with an adviser to start preparations for a planned separation of its consumer health division, people with knowledge of the matter said.
• Alstom SA, a train maker, flagged a possible equity raise alongside job cuts and asset sales to help shore up its balance sheet.

Key events this week:

• China new home prices, Thursday
• U.S. initial jobless claims, industrial production, Thursday
• Walmart earnings, Thursday
• Cleveland Fed President Loretta Mester, New York Fed President John Williams and Fed vice chair for supervision Michael Barr speak, Thursday
• Bank of England deputy governor Dave Ramsden and ECB President Christine Lagarde speak at event, Thursday
• U.S. housing starts, Friday
• U.S. Congress faces a midnight deadline to pass a federal spending measure, Friday
• ECB President Christine Lagarde speaks, Friday
• Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins and San Francisco Fed President Mary Daly speak, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.2 per cent as of 4 p.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average rose 0.5 per cent
• The MSCI World index rose 0.6 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.2 per cent
• The euro fell 0.3 per cent to US$1.0843
• The British pound fell 0.7 per cent to $1.2410
• The Japanese yen fell 0.7 per cent to 151.42 per dollar

Cryptocurrencies

• Bitcoin rose 5.5 per cent to $37,560.5
• Ether rose 3.2 per cent to $2,045.2

Bonds

• The yield on 10-year Treasuries advanced nine basis points to 4.54 per cent
• Germany’s 10-year yield advanced four basis points to 2.64 per cent
• Britain’s 10-year yield advanced eight basis points to 4.23 per cent

Commodities

• West Texas Intermediate crude fell 2.2 per cent to $76.57 a barrel
• Spot gold fell 0.2 per cent to $1,959.39 an ounce