US stocks move into record territory

Wall Street stock markets moved further into record territory as investors shrugged off the higher inflation reading in the US to focus on President Joe Biden’s latest stimulus deal.

The S&P 500 rose 0.2 percent in early New York trade, putting the blue-chip gauge on track to reach its record closing high. The technology-focused Nasdaq Composite Index rose 0.1 percent.

US stock markets were also hit Its all-time high Thursday after Biden secured a nearly $1 trillion infrastructure spending deal, boosting industrial, energy and financial stocks.

Data on Friday showed that core US personal consumption expenditures, the Federal Reserve’s preferred measure of price increases, reached 3.4 percent in the 12 months through May, the biggest increase in 29 years.

The month-on-month rise in inflation was slightly below economists’ expectations, however, and is likely to take some pressure off the US central bank to change its ultra-loose monetary policy.

“We’re seeing a bit of a relief, with stocks also being supported by infrastructure news,” said Keith Parker, chief US equities strategist at UBS. He added that expectations that companies would report strong earnings in the second quarter as they reap the benefits of reopening the US economy was also a “strong tailwind”.

The benchmark 10-year Treasury yield did not move at 1.496 percent after the inflation data.

“There is no doubt that inflation rates in the next few months will continue to rise,” said Francesco Sandrini, senior multi-asset analyst at fund manager Amundi.

“But markets are struggling to find confidence in what to do about it,” he said, after conflicting messages from Federal Reserve officials about whether higher prices should lead to monetary tightening.

Federal Reserve Chairman Jay Powell described booming inflation in the world’s largest economy, which has the potential to erode long-term returns from stocks and bonds, as fleeting.

Louis Federal Reserve Chairman James Bullard indicated Thursday that he thought the price hike was more problematic. He said in a. “There is a new risk that inflation may continue to surprise the upside.” Show.

Both Pollard and Atlanta Federal Reserve Chairman Rafael Bostick have said in recent days that the first post-pandemic interest rate hike may come next year, although most Fed officials expect it to be in 2023.

Investors who own bonds, which are more sensitive to inflation than stocks, fear that price increases will become more constant with jumps in agricultural commodities Translate to higher food costs.

A Bank of America survey, published Friday, found that inflation was the issue credit investors were most concerned about, for the first time since April 2018.

“Inflation concern, though, is not about normal procedures,” said the Bank of America survey authors. “40 percent [year-on-year] Rising global food prices “threaten” to initiate policy uncertainty.

Elsewhere in the markets, Brent crude rose 0.3 percent to $75.75 a barrel. The dollar index, which measures the greenback against major currencies, was down 0.3 percent. The euro rose 0.3 percent against the dollar to $1.1968.

Without Hedging – Markets, Finance and Strong Opinion

Robert Armstrong explains the most important market trends and discusses how the best minds on Wall Street respond to them. Participation Here To send the newsletter directly to your inbox every day of the week

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button