Wall Street remains bullish as investors agree with Fed assessment of transitory inflation

Early Friday morning, Dow Jones futures, S&P 500 futures, and Nasdaq futures all moved upward. After Tesla stock recaptured a crucial level, the Model S Plaid delivery event has begun.

On Thursday, the stock market rallied despite strong inflation data, with the S&P 500 index setting a new high and Treasury rates falling to new lows.

Following an overnight rise in the S&P 500 to a new high and a technological surge that lifted the Nasdaq 100, US futures pushed higher. Day traders’ favourite meme stocks, such as GameStop Corp., plummeted.

The yield on a 10-year US Treasury note fell to 1.43 percent, its lowest level since March. The yield had momentarily risen in US hours due to higher-than-expected consumer price increases. The value of the dollar has dropped.

The Dow Jones Industrial Average increased 19 points, or 0.06%, to 34,466.24 during the regular session. The S&P 500 finished the day at 4,239.18, up 0.47%. The Nasdaq Composite completed the day at 14,020.33, up 0.78%.

On Thursday, the Labour Department released statistics on consumer price indexes, revealing that inflation is climbing at its quickest rate since 2008 as the economy recovers from the pandemic-related slowdown.

The CPI, which includes food, energy, grocery, and prices across a range of commodities, increased by 5% in May compared to the same month a year ago.

As vaccinations put the epidemic under control, the increase in the US CPI in May was mostly driven by categories related to a broader reopening of the economy. Despite evidence of escalating pricing pressures, fears of a jump in longer-term borrowing costs destabilizing global markets have subsided. This recent market reaction indicates that investors agree with the Federal Reserve’s assessment that inflationary pressures are only temporary and that any adjustments in ultra-accommodative policy would be gradual.

This strategy was reinforced across the Atlantic on Thursday, when the European Central Bank upped its inflation prediction and reaffirmed its commitment to continue buying emergency bonds at a quicker pace to keep the euro area afloat.

Crude oil, on the other hand, halted its advance and remained around $70 a barrel. The virtual currency has been buffeted by international banking authorities’ decision to designate it as the riskiest of assets, but it has remained stable for the week at around $36,700. Investors will be watching the commencement of the Group of Seven leaders meeting in the United Kingdom later on Friday.

 



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