S&P 500 closes at record high after new inflation, jobs data

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Top line

The S&P 500 hit a new record for the first time in more than a month on Thursday, as economic data pointed to improvements in the pandemic’s ongoing recovery, triggering renewed optimism among investors.

Highlights

The S&P climbed nearly 20 points, or 0.5%, on Thursday, topping 4,239 points and breaking a closing high of 4,232 since May 7.

The Dow Jones Industrial Average, meanwhile, rose less than 0.1% to 34,466 points, about 0.9% below its last high, also on May 7.

The tech-rich Nasdaq, which has underperformed the broader market in recent months after a year of massive performance, jumped 0.8%, though still 0.5% from a February record.

A large number of health and tech stocks led the market rally, with ServiceNow, Enphase Energy and Align Technology climbing around 5% each.

Drugstore chain Walgreens and the pharmaceutical giant topped the Dow Jones, adding 3.5% and 3% respectively.

Thursday’s stock gains came after new jobless claims fell for the sixth week in a row and hit a new pandemic low of 376,000, according to the Labor Department.

Tangent

Consumer prices rose 0.6% between April and May and 5% in the 12 months ending in May, the highest annual rate in 13 years and more than economists expected. “While it is true that the economic disruption of the pandemic has drastically changed the spending habits of consumers around the world, raising concerns about rising inflation, these levels are what we expected and represent a short-term trend that will correct itself over time, ”Oliver Wright, a global head of consumer goods and services at Accenture, said of the report.

Key context

Bold actions by central banks around the world have helped avert a severe and prolonged economic slowdown during the pandemic, but experts have feared in recent weeks that a global economy awash in liquidity could cause problematic inflation and reservoir markets on down the line. This tension peaked ahead of last month’s Consumer Price Index report, which showed inflation hit a 13-year high of 4.2% in April. Stocks plunged ahead of the reading and then struggled to cut losses for weeks on end, but the Federal Reserve has since helped allay concerns by insisting it will not ease its accommodative policy as long as l The economy will not have reached full employment and inflation that systematically exceeds 2%. Thursday’s CPI report marks just the second month in over a year that inflation has exceeded 2%, and same-day unemployment report was worse than economists expected despite improving week to week.

Further reading

Prices climbed 5% on an annual basis in May (TBEN)

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