MSCI’s gauge of stocks across the globe added 0.39%, the Dow Jones Industrial Average gained 0.43%, the S&P 500 advanced 0.42%, and the Nasdaq Composite rose 0.54%

Global stocks rose on Tuesday and the dollar hovered near a five-month low as investors held fast to bets that cooling U.S. inflation will lead the Federal Reserve to cut interest rates in 2024.

Oil prices climbed more than 3% earlier in the session to the highest in almost a month, as Middle East strife continues and investor hope possible rate cuts will boost global economic growth and fuel demand.

Trading was thin on the day after Christmas with several markets, including those in Australia, Hong Kong, Britain and Germany, closed for Boxing Day.

MSCI’s gauge of stocks across the globe added 0.39%. On Wall Street, the Dow Jones Industrial Average gained 0.43%, the S&P 500 advanced 0.42%, and the Nasdaq Composite rose 0.54%.

In a sign the U.S. economy was holding up, a report by Mastercard on Tuesday showed U.S. retail sales increased 3.1% between November 1 and December 24, lower than last year’s 7.6% gain.

Consumers are still spending, but they are still price conscious and want to stretch their budgets, said Arun Sundaram, an analyst at CRFA Research.

U.S. crude cut earlier gains to finish up 2.1% at $75.12 per barrel and Brent was at $80.66, up 2.01% on the day.

The dollar index dropped 0.17% to 101.47, near a five-month low of 101.42 hit on Friday. A weak dollar helped to lift the euro up 0.3% to $1.104.

Investors were still digesting data released on Friday that showed U.S. prices dropped in November for the first time in more than 3-1/2 years, underscoring the economy’s durability.

Inflation, as measured by the PCE price index, dropped 0.1% last month.

In a way, markets could not have asked for better news from the continued easing of the core personal consumption expenditures deflator in November, said Nicholas Chia, Asia macro strategist at Standard Chartered.

Thin liquidity conditions are likely to aggravate the ‘Santa Claus rally’ in equities ahead of the turn of the year, Chia said.

In Asia, China stocks dropped 0.47%, weighed down by semiconductor shares, while gaming stocks steadied after a slew of companies announced share buyback plans. Hong Kong’s Hang Seng Index remained closed.

Japan’s Nikkei added 0.16% and remains the best performing major Asian stock market with a 27% rise in 2023.