treasury yields fell sharply and eased their grip on the stock market thursday helping fuel the monster rally that broke out after coolerthanexpected inflation data the rise in yields this year has choked off stock market gains and weighed on technology and growth stocks in particular they are highpriced stocks that do better when money is cheap tech led the market higher thursday with a jump of 67 ark innovation etf  a poster child for growth jumped 135 and had its best day ever the consumer price index rose 04 in october well below the 06 expected by economists according to dow jones stocks had their best day since the postpandemic rally in 2020 the benchmark 10year treasury note yield fell below 4 thursday and stood at 383 in afternoon trading after touching a high of 432 just a few weeks ago the interest rate story is the big one if its pricing in the possibility that the fed is close to the end of the tightening cycle that would be positive for stocks said ed clissold chief market strategist at ned davis research the risk is of course that ultimately this ends up in a hard landing25 or 30 of the time the fed has pulled off a soft landing but this is a trickier one than normal but that doesnt mean you cant get a yearend rally little more to go the rate move was huge but may not have that much more to go john briggs head of strategy at natwest markets said he could see the 10year yield dip to 36 youve got upside risk from the fed he said tell me what the next jobs and inflation numbers are going to be the rates move is more than i expected compared to others in the futures market traders were betting thursday that the fed would raise its fed funds futures rate to 488 before stopping next spring ahead of the 830 am et cpi report fed funds futures were priced for an end point for the fed of 505 the dow jones industrial average surged more than 1200 points and the s  p 500 jumped 55 to 3956 the nasdaq was the standout rising 74 to over 11000 small caps also gained with the russell 2000 climbing 61 clissold said theres a risk the fed goes too far while inflation is cooling that would push the economy into recession but first seasonal factors are at work when the stock market typically moves higher in the fourth quarter of midterm election years i think 4200 on the s  p 500 is pretty good to consider for this year clissold said thats kind of where the market hit resistance before it had been support before and it broke down now if we can get above the august highs that would imply the rally could last into 2023 if this soft landing scenario plays out the lows are likely behind us clissold favors small caps as a play during the rally since they are domestically focused he also likes energy health care and materials of tech he said that would not be the first place we would look and it is still expensive less dollar drag rising yields and the strong dollar have been two trends that investors have been watching as the federal reserve normalized policy this year but now there are signs the strong dollar may not be such a drag the dollars gains have dampened some earnings growth because of the effect of currency translation and the pressure on foreign sales for multinationals the dollar index is up nearly 13 yeartodate marc chandler chief market strategist at bannockburn global forex said the dollars rise may be ending and that its been peaking against the british pound sterling and canadian dollar he said the positioning of traders in the euro currently shows them holding the biggest speculative long positions in futures contracts since the middle of last year the dollar is carving about a big top  i dont think people are really appreciating how historically overvalued the dollar is said chandler the euro and yen are about 45 undervalued this is going to take a while to correctthe strong dollar has been a headwind for earnings and it will probably become a tailwind a year from now well be talking about a weaker dollar being a benefit to earnings jonathan golub chief us equities strategist at credit suisse said the markets may just be overreacting to the cpi and the move is not part of a bigger one the market is extrapolating that the fed is going to have to do less if you got that in isolation its a reasonable assumption but if you put it in a mosaic with the labor market and earnings and everything else im not sure the market should have give us a 5 jump today its not a new world here