S&P 500 closes at record high as US inflation fears recede

• The S&P 500 closed at a record high yesterday after the US Federal Reserve said the current period of heightened inflation will only be temporary
• All three major US stock exchanges posted gains, with popular mega-cap stocks putting the NASDAQ out front
• Of the S&P 500’s 11 major sectors, healthcare enjoyed the largest percentage gains
• The biggest loser was the financial sector, which was weighed down by easing US Treasury yields
• All up, the Dow Jones Industrial Average rose 0.04 per cent, while the NASDAQ jumped 0.77 per cent and the S&P 500 gained 0.47 per cent

The S&P 500 closed at a record high yesterday as economic data appeared to support the US Federal Reserve’s claim that the current period of heightened inflation will only be temporary.

All three major US stock exchanges posted gains, with popular mega-cap stocks putting the NASDAQ out front.

Data from the US Labor Department’s consumer price index (CPI) came in above consensus, adding fuel to the debate over whether current price spikes could turn into long-term inflation, despite the Fed’s assurances to the contrary.

However, a closer look shows that much of the price surge came from items like commodities and airfares, meaning it’s likely to be only temporary.

“Earlier this week we had extremely boring market days as we all had our eyes on the bullseye of this CPI report,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

“But once people looked under the surface, the majority of the higher inflation is due to the reopening, and stocks had a relief rally.”

A US House of Representatives committee also passed a US$547 billion (roughly A$705.59 billion) infrastructure spending bill focused on surface transportation, adopting some of President Joe Biden’s proposals under his larger US$2.3 trillion (A$2.97 trillion) infrastructure package.

Regardless, both industrials and transport — sectors poised to benefit from infrastructure spending — were in negative territory.

Of the S&P 500’s 11 major sectors, healthcare enjoyed the largest percentage gains. The biggest loser was the interest rate-sensitive financial sector, which was weighed down by easing US Treasury yields.

Boeing was one of the most prominent gainers, with sources telling Reuters that United Airlines was in discussions to place a multi-billion-dollar order for single-aisle jets.

Pfizer was another, which rose after the United States said it would pay around US$3.5 billion (A$4.51 billion) for 500 million COVID-19 vaccine doses that it intends to donate to the 100 lowest income countries.

All up, the Dow Jones Industrial Average rose 0.04 per cent, while the NASDAQ jumped 0.77 per cent and the S&P 500 gained 0.47 per cent.