U.S. stocks gain on embrace of 'Goldilocks' mood

U.S. stocks closed higher and Treasuries slid as investors picked through another batch of solid economic data to find different takeaways, even as worries mounted that it would force a hawkish response from the U.S. Federal Reserve.

The S&P 500 rose 0.3 per cent after earlier dropping more than 0.75 per cent. The Nasdaq 100 climbed 0.8 per cent. Two-year Treasury yields held near 4.60 per cent. The dollar advanced versus major peers.

U.S. retail sales in January jumped by the most in almost two years, suggesting that strong consumer spending will keep prices elevated and increase pressure on the Fed to step up its efforts to tamp down inflation. Homebuilder sentiment rose in February by the most since mid-2020, as easing mortgage rates have boosted the housing market.

The data, coming one day after the hotter-than-expected U.S. consumer price inflation report, sent Treasury yields higher on fears of more rate hikes. Yet equity investors found encouraging news in the same reports.