Stocks climbed after a five-day slide, with traders awaiting key inflation figures for clues on whether Federal Reserve officials will be able to notch down their aggressive tightening campaign.

The rebound in the S&P 500 followed a sell-off that put the equity gauge on the cusp of an important technical indicator: its average price of the past 100 days. The tech-heavy Nasdaq 100 outperformed, led by gains in giants Apple Inc. and Microsoft Corp. Treasuries also reversed course Thursday, with 10-year yields on the rise and approaching 3.5%.

Friday's producer price index for November is one of the final pieces of data Fed policymakers will see before their Dec. 13-14 policy meeting. The PPI in October cooled more than expected. On the eve of the report, traders also weighed some signs the labor market is cooling, with continuing jobless claims climbing to the highest since early February.

"Investors will have a lot to digest these next few days as they get a clearer picture of where we stand in the fight against inflation before the Fed decision," said Mike Loewengart at Morgan Stanley Global Investment Office. "The market is largely expecting the slowdown in rate hikes to begin next week, but whether the pivot will be enough to steer the economy into a soft landing remains the question."

Strategists from Morgan Stanley to JPMorgan Chase & Co. have warned investors against piling back into risk on hopes the Fed is getting close to pivoting to easier policy.

"Presumably if the Fed is pivoting this time around, it's not for a good reason. It's a deteriorating fundamental picture," Joyce Chang, chair of global research at JPMorgan, told Bloomberg Television. "I mean, is that really a reason to be buying risk? I think it's premature to say that there is a Fed pivot."

At a time when virtually all of Wall Street is on guard against a recession, Jim Paulsen at Leuthold Group said stocks are about to rally at least 25% in the next year. He predicts the S&P 500 will hit 5,000 in the coming 12 months, a far more bullish call than any provided by the strategists Bloomberg regularly surveys.

"The lows are in, and I think we are starting a new bull market," Paulsen told Bloomberg Television. "The Fed is not the only policy driver in the room. There are others and a lot of those have already started to ease."

Besides the 100-day moving average, the S&P 500 is trading near a key support at 3,900, a level that has provided the pivot point for reversals on multiple occasions this year.

As the equity market rebounded, the Cboe Volatility Index fell to around 23. Yet derivatives strategists at JPMorgan Chase & Co. say the VIX has further room to advance.

They expect the fear gauge to average at 25 next year, and see the gauge trading above that level in the first half of the year amid elevated monetary-policy concern before subsiding below the line in the latter part of 2023 when the central bank is expected to pivot its stance.

Heightened trader concern over an economic recession has recently pushed up the Cboe equities put/call ratio — the relative trading volume of loss-protecting contracts versus bullish ones — to elevated levels

That suggests there's "too much pessimism," according to Ed Yardeni, president of his namesake research firm. "It favors a year-end rally rather than a year-end crash."

Rita Nazareth reports for Bloomberg News.

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