Stocks enjoy best week in a year

Stocks ripped last week, with the S&P 500 posting its best showing in a year.

Context: The rally reflected a perfect combination of inflation-easing economic data, dovish cooings by the Federal Reserve, and rock-solid earnings results.

The numbers: The S&P rose 5.9%, the largest weekly leap since November 2022. The same for the Nasdaq composite index which rose, 5.2%.

Between the lines: The real key to the rally was the sharp decline last week of long-term interest rates — the yield on the 10-year Treasury note — which plunged from almost 5% to 4.5%, a massive move in the typically staid bond markets.

• As we've written ad nauseam — especially last year when a surge in rates clobbered stocks — bond yields have been the single most important key to understanding the stock market in recent years.

State of play: Stocks, which had been up nearly 20% earlier in the year, and saw those gains shrink to just 7% late last month, are now up 13.5% in 2023.

What's next: For the good times to keep rolling, the market will be watching the U.S. government's auction of 10-year Treasury notes on Wednesday. And the October reading on the Consumer Price Index a week from tomorrow will get a lot of eyeballs.

The bottom line: The dream of the bull market is alive — (in Portland).