US stocks rose to record highs Thursday morning, despite evidence of rising inflationary pressures in America, accelerating at the fastest pace in years. The rally in equities and the rather muted bond market response to consumer prices means that investors are confident that price pressures will not continue.
What do the core tests do?
Dow Jones Industrial Average DJIA,
rose 242 points, or 0.7%, to 34,690.50.
S&P 500 SPX,
Quotes rose 28 points, or 0.7%, to 4,247 points, the first daily record since May 7.
Nasdaq COMP Composite Index,
added 109 points, or 0.8%, to 14,018 points.
Shares closed slightly lower on Wednesday, with the Dow shedding 152.68 points, or 0.4%, to 34,447.14. The S&P 500 backed off modest early gains that pushed the large cap indicator slightly above its previous record close of 4,232.60 set on May 7 and ended the day with a 0.2% drop. The Nasdaq Composite closed down 0.1%.
What drives the market?
U.S. stocks were at an all-time low on Thursday, rebutting a report that showed the cost of living rose in May, pushing inflation to a 13-year high of 5% as the economy fully recovers from the COVID pandemic.
The inflation rate over the past year has risen to 5% from 4.2% in the previous month. This put it at its highest level since 2008, when oil prices hit a record $ 150 a barrel. Previously, inflation was last as high as it is now, in 1991.
The government said Thursday that the consumer price index jumped 0.6% last month, marking the fourth straight rise. Economists polled by Dow Jones and The Wall Street Journal had forecast 0.5% growth.
However, investors seem to have been encouraged by the fact that inflation is short-lived, with current reports of price increases highlighting so-called baseline effects where weaker months of inflation were gradually reversed from annual rates, resulting in mechanical price increases. price levels.
Mike Levengart, managing director of investment management at E-Trade Financial, said there is a big hidden appetite after months of COVID-related lockdowns.
“Keep in mind that as we begin to return to a full economic recovery, there are constrained supply and demand constraints due to shortages of raw materials and labor,” the strategist wrote. “This creates inflation, which the Fed considers transitory, which means it will pass too,” he added.
Stocks have largely been locked in a tight range close to all-time highs as investors grapple with more information on the outlook for the economy following the public health crisis that has hampered the global economy for a year.
However, concerns about inflation, judging by the movements of early Thursday morning, are slowly dying down. Yield on 10-year Treasury bonds TMUBMUSD10Y,
on Wednesday fell to its lowest level since early March, but on Thursday rose at around 1.52%.
A sharper-than-expected jump in April CPI last month shook markets briefly, sparking fears of runaway inflation and the likelihood that the Federal Reserve could take earlier-than-expected steps to slow bond purchases.
A separate report on weekly initial jobless claims fell 9,000 to 376,000 in the week ending June 5, the Labor Department said Thursday, the lowest filing rate since March 2020. Economists polled by The Wall Street Journal had forecast new filings to drop to a seasonally adjusted 370,000.
Meanwhile, on Thursday, the ECB gave several surprises by keeping interest rates unchanged and, as expected, did not change the size of its asset purchase programs. The ECB said it expects continued asset purchases as part of its Pandemic Emergency Procurement Program, or PEPP, at a “significantly faster” pace than in the first months of this year.
Meme stocks were also in the spotlight after GameStop Corp.
Late Wednesday night it was revealed that the Securities and Exchange Commission had asked her to cooperate with an investigation into the unprecedented volatility of her stock in recent months. He also suggested that this is not the only object being investigated.
Looking ahead, the US federal budget data for May will be released at 2:00 pm ET.
See also: BANG Shares Affected After GameStop Investigates Regulatory Investigation
Which companies are in focus?
GameStop nominated two Amazon.com Inc. late Wednesday. AMZN,
officials as new senior executives, shortly after private investor Ryan Cohen was elected chairman of the company’s board of directors. The company also announced plans to sell more shares. Stocks of popular memes in premarket dropped more than 5%. Shares fell more than 9%
Other shares of memes have been controversial AMC Entertainment Holdings Inc.
growth by 2.5%; BlackBerry Ltd.
decrease by 1.3%; Koss Corp.
down 3.9%; as well as Nokia Corp.
less than 1% discount.
rose 14% after the retailer, formerly known as Restoration Hardware, again exceeded earnings expectations in early 2021 and raised its full-year forecast.
How are other assets doing?
The yield on 10-year Treasury bonds TMUBMUSD10Y was 1.6 basis points higher at around 1.50%, remaining near its lowest level since March. The yield and price of bonds move in opposite directions.
The US dollar index ICE DXY, which measures the currency against a basket of six major competitors, was down 0.1%.
Crude oil futures CL00 rose, with West Texas Intermediate crude for July delivery up 57 cents, or 0.8%, to $ 70.51 a barrel. GC00 gold futures fell $ 2.20, or about 0.1%, to $ 1,893.30 an ounce.
European stocks are up slightly: the pan-continental Stoxx Europe 600 SXXP,
an increase of 0.2%. London FTSE 100 UKX,
rose by 0.4%.
In Asia, the Shanghai Composite SHCOMP closed 0.5% higher, Hong Kong’s Hang Seng HSI index was largely unchanged, and Japan’s Nikkei 225 NIK added 0.3%.