S&P 500 closes at record high as long-term inflation fears abate

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People are seen on Wall St. outside the New York Stock Exchange (NYSE) in New York City, U.S., March 19, 2021. REUTERS/Brendan McDermid

Wall Street stocks ended firmer on Thursday, with the S&P 500 (.SPX) hitting a record closing high, as economic data appeared to support the Federal Reserve’s assertion that the current wave of heightened inflation will be temporary.

All three major U.S. stock indexes advanced, with market-leading megacap stocks putting the Nasdaq (.IXIC) out front. But economically sensitive transports (.DJT) and smallcaps (.RUT) ended the session in negative territory.

The Labor Department’s consumer price index (CPI) data came in above consensus and added fodder to the debate over whether current price spikes could morph into long-term inflation, despite the Fed’s assurances to the contrary. read more

But a closer look showed that much of the price surge came from items such as commodities and airfares, and is therefore likely to be temporary.

“Earlier this week we had extremely boring market days as we all had our eyes on the bullseye of this CPI report,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. “But once people looked under the surface, the majority of the higher inflation is due to the reopening, and stocks had a relief rally.”

“The market is taking it in stride as it realizes the whole economy isn’t overheating,” Detrick added.

A U.S. House of Representatives committee passed a $547 billion infrastructure spending bill targeting surface transportation, adopting some of President Joe Biden’s proposals as part of his broader $2.3 trillion infrastructure package. read more

Still, industrials (.SPLRCI) and transports, sectors that stand to benefit from infrastructure spending, were in negative territory.

Unofficially, the Dow Jones Industrial Average (.DJI) rose 12.21 points, or 0.04%, to 34,459.35, the S&P 500 (.SPX) gained 19.71 points, or 0.47%, to 4,239.26 and the Nasdaq Composite (.IXIC) added 106.86 points, or 0.77%, to 14,018.61.

Among the 11 major sectors of the S&P 500, healthcare (.SPXHC) enjoyed the largest percentage gains.

But the interest rate-sensitive financial sector (.SPSY) was the biggest loser, weighed by easing U.S. Treasury yields.

GameStop Corp (GME.N), the stock most closely associated with the social media-driven “meme stock” phenomenon, slid after the videogame retailer said it may sell new shares. read more

Other stocks that have benefited from the retail short-squeeze rally, including Clover Health Investments Corp (CLOV.O), AMC Entertainment Holdings (AMC.N), Bed Bath & Beyond Inc and GEO Group (GEO.N), also ended the session lower. read more

Boeing Co (BA.N)gained after sources told Reuters that United Airlines (UAL.O) was in talks to place a multi-billion-dollar order for single-aisle jets potentially split between Boeing and Europe’s Airbus (AIR.PA). read more

Pfizer Inc (PFE.N)rose on news that the United States would pay the drugmaker about $3.5 billion for 500 million COVID-19 vaccine doses that it intends to donate to the 100 lowest income countries. read more

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