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The market is romping, as equity-friendly news seems to be erupting on all sides.
Why it matters: Stocks' recent move higher marks a break with the last few months, when a slump eroded most of the S&P 500's gains from early 2023.
State of play: This month the S&P is up in 10 of the market's 12 trading sessions.
- In November, the S&P is up 7.4%, the Nasdaq composite is up 9.8% and the Russell 2000 index of small-cap stocks is up 8.4%.
- Suddenly, the S&P is just 6% from touching an all-time high, the traditional confirmation that a new bull market has been born.
Zoom in: Part of what seems to be going on is a bit of optimism about improving economic ties between China and the U.S. following President Biden's one-on-one meeting with China's Xi Jinping on Wednesday.
- Companies for which China is a key base of production — such as toy makers Hasbro and Mattel, and sneaker makers V.F. Corp., Skechers and Nike — all posted strong gains on Wednesday.
- Likewise, stocks of companies for which China is a large source of revenue growth also jumped, including Expedia, Estée Lauder and Match Group.
Meanwhile, there may be some relief among investors about the passage of a short-term funding bill that avoids a government shutdown through the holidays.
The big picture: All this adds to the plethora of favorable developments that are pushing the S&P 500 toward what would be its best month of the year — if trading ended Wednesday.
- Long-term interest rates — hugely influential for stock values — are down sharply, as inflation eases and the Fed hikes appear finished.
- The economy continues to seem quite strong.
- And earnings have been pretty good, with S&P 500 companies on track for the biggest jump in profits since the middle of last year. (Target and Home Depot both soared after reporting better-than-expected profits this week.)
The bottom line: A couple of weeks ago, hardly anybody saw a rally like this coming — but here we are.
