Record high stocks, inflation fears ease

·2-min read

Wall Street stocks have ended firmer, with the S&P 500 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 US stock indexes advanced, with market-leading megacap stocks putting the Nasdaq out in front.

But economically sensitive transports and smallcaps 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.

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," Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, said.

"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 realises the whole economy isn't overheating."

A US House of Representatives committee passed a $US547 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.

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

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

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

But the interest rate-sensitive financial sector was the biggest loser, weighed by easing US Treasury yields.

GameStop Corp, the stock most closely associated with the social media-driven 'meme stock' phenomenon, slid after the videogame retailer said it may sell new shares.

Other stocks that have benefited from the retail short-squeeze rally, including Clover Health Investments, AMC Entertainment, Bed Bath & Beyond and GEO Group, also ended the session lower.

Pfizer Inc rose on news that the United States would pay the drugmaker about $US3.5 billion for 500 million COVID-19 vaccine doses that it intends to donate to the world's lowest-income countries.