A woman and her trainer workout outside the New York Stock Exchange, Monday, June 7, 2021. Stocks are opening higher on Wall Street Thursday, June 10 nudging the S&P 500 back into the green for the week. The benchmark index was up 0.6% in the early going, and the tech-heavy Nasdaq was up 0.4%. (AP Photo/Richard Drew)
By Alex Veiga
Health care and technology companies helped drive stocks higher Thursday, bringing the S&P 500 index to a record high and out of the red for the week.
The benchmark index rose 0.5%, and is on track for its third straight weekly gain. Bond yields initially rose, then mostly fell after a much-anticipated report showing a big jump in inflation last month.
The Labor Department said consumer prices jumped 5% in May, the biggest year-over-year increase since 2008. The figure was higher than the 4.6% rise that economists had expected.
While investors have been concerned about inflation for weeks, the May report seemed to reinforce the growing consensus that any increase in inflation will be temporary. A significant portion of the rise in consumer prices was tied to the sale of used cars, for example, which is largely attributed to the fact that many rental car companies are buying vehicles to beef up their fleets as people return to traveling.
“Keep in mind that as we start to make our way back to a full economic recovery, there is pent up demand and supply constraints from raw material and labor shortages,” said Mike Loewengart, a managing director at E-Trade Financial. “This creates the type of inflation that the Fed believes is transitory, meaning it too shall pass. Whether or not they are correct remains to be seen.”
The S&P 500 gained 19.63 points to 4,239.18, just beating the index's previous all-time high set on May 7th. The Dow Jones Industrial Average edged up 19.10 points, or 0.1%, to 34,466.24. The Nasdaq Composite rose 108.58 points, or 0.8%, to 14,020.33.
Smaller company stocks lagged the broader market. The Russell 2000 index fell 15.72 points, or 0.7%, to 2,311.41.
Bond yields initially rose after the inflation data, then fell broadly by late afternoon. The yield on the 10-year Treasury note slipped to 1.45% from 1.49% late Wednesday.
Organon jumped 6.6% for the biggest gain in the S&P 500 and Pfizer rose 2.2% as health care stocks led the market higher. Technology and communication stocks also rose. Microsoft gained 1.4% and Activision Blizzard added 1.2%. Banks, industrial and materials companies were among the decliners. JPMorgan slid 1.6%, while Caterpillar dropped 3.8%. Vulcan Materials fell 3.1%.
Investors also reacted positively to more data that showed continued improvement in the labor market. The number of Americans who filed for unemployment benefits last week fell by 9,000 to 376,000, another pandemic low.
Stocks have been meandering all week as investors looked ahead to another inflation snapshot. The worry is that if signs of inflation are more than transitory, as the Federal Reserve has suggested, it could prompt central banks to withdraw stimulus from the economy to combat rising prices.
“The inflation outlook has rightfully been top of mind since last month’s blowout report,” Ryan Detrick, market strategist at LPL Financial wrote in a research note. “Under the hood, though, we think the picture is a bit more sanguine than the headlines would suggest, and still believe inflation will be relatively well-contained over the intermediate-to-long term.”
Investors will get to see next week how the Fed is reading the latest inflation barometer and what monetary policy changes, if any, the central bank may consider. The Fed's policymaking committee is due to deliver its latest economic and interest rate policy update next Wednesday.
Markets will also be tuning in this weekend for any developments at the summit of the Group of Seven in Britain. At the top of the leaders’ agenda is helping countries recover from the coronavirus pandemic, which has killed more than 3.7 million people and wrecked economies.
The G-7 leaders are meeting for three days at a British seaside resort. It's the first such gathering since before the pandemic.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
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