What is causing the market activity on Thursday as the S&P 500 reaches 4,500 and oil prices reach $90 despite concerns of rising inflation?

On Thursday, there was a significant rally in risk markets, including equities and commodities, due to a series of positive economic developments that eased concerns of a recession. The Producer Price Index and Consumer Price Index both exceeded expectations in August, indicating an increase in price pressures in the economy. However, this did not negatively impact the markets as consumer spending remained strong, with retail sales surpassing forecasts for the fifth consecutive month. China implemented a 25 basis point reduction in the reserve requirement ratio for all banks, injecting liquidity into their struggling economy. Additionally, the European Central Bank raised rates but signaled an end to tightening measures, supporting the momentum of risk assets. All S&P 500 sectors performed well, led by cyclical sectors such as energy, materials, and real estate. Oil prices reached $90 per barrel, reaching fresh highs for the year and supporting energy and oil giant stocks. U.S. stock indices traded higher, with the Russell 2000 outperforming other benchmarks. The Nasdaq 100, S&P 500, and Dow Jones also saw gains. Major U.S. equity ETFs, including SPY, DIA, and QQQ, experienced increases in value. Norwegian Cruise Line Holdings, MetLife Inc., and Shift4 Payments were among the stocks in focus, with upgrades and positive announcements contributing to their gains. Alnylam Pharmaceuticals faced a decline due to concerns raised by an FDA panel. Nikola Corp. saw a significant increase in stock price despite reports of fires in its battery electric trucks. Commodities such as crude oil and gold experienced price fluctuations, while treasury yields and the U.S. dollar showed slight increases. European equity indices closed higher, and Bitcoin saw a slight increase in value.