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S&P 500, Nasdaq hit record closing peaks on eve of Fed meeting

EconomyJun 14, 2021 07:47PM ET
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© Reuters. FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., April 16, 2021. REUTERS/Carlo Allegri/File Photo

By David French and Medha Singh

(Reuters) - The S&P 500 and Nasdaq eked out record high finishes on Monday, despite most traders being focused on this week's Federal Reserve meeting and not on adding to existing positions.

Investors are seeking new cues from the central bank on its inflation outlook, after recent data indicated the U.S. economy is regaining momentum but not overheating. This has eased investor worries about inflation.

While the Fed has reassured that any spike in inflation would be transitory, policymakers could begin discussing the tapering of bond buying at the Tuesday-Wednesday meeting. Most analysts, however, do not expect a decision before the central bank's annual Jackson Hole, Wyoming, conference in August.

Any shift in the Fed's dovish rhetoric could upend equity markets. The S&P benchmark has climbed 13.1% this year, while the Dow and the Nasdaq have risen 12.7% and 9.2%, respectively.

The Dow Jones Industrial Average fell 85.85 points, or 0.25%, to 34,393.75, the S&P 500 gained 7.71 points, or 0.18%, to 4,255.15 and the Nasdaq Composite added 104.72 points, or 0.74%, to 14,174.14.

"There are really good arguments on both sides of the inflation debate, but to think it's a good idea to make substantive changes right now, based on continued increase in inflation or a transitory rate, seems silly to me," said Mark Stoeckle, CEO and senior portfolio manager of the Adams Funds.

High-growth tech-related stocks, which were at the heart of a sell-off driven by fears of rising rates, have regained their footing this month at the expense of economy-linked industrials, financials and materials stocks.

The S&P technology index closed at 2,515, just shy of its highest-ever finish on April 26. It was one of a half-dozen sectors that ended in positive territory. Materials and financials were the leading laggards.

Lordstown Motors Corp tumbled 18.8% after it said Chief Executive Steve Burns and Chief Financial Officer Julio Rodriguez have resigned, days after the electric-truck maker warned that it may not have enough cash to stay in business over the next year.

The news weighed on special purpose acquisition companies that are trying to merge with electric-vehicle manufacturers, as Lordstown Motors did. Churchill Capital Corp IV, which is combining with Lucid Motors, and ArcLight Clean Transition Corp, which announced a tie-up with electric bus maker Proterra, fell 4.1% and 4.8% respectively.

"There are a lot of bad companies, but there are some good companies in these SPACs that are going to be good opportunities at some point. You just have to have a lot of patience," said Stoeckle.

Tesla (NASDAQ:TSLA) gained 1.3% as CEO Elon Musk tweeted that the electric-car maker may resume bitcoin transactions. Bitcoin vaulted back above $40,000 on Musk's comments.

Volume on U.S. exchanges was 9.80 billion shares, compared with the 10.57 billion average over the last 20 trading days.

The S&P 500 posted 35 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 130 new highs and 24 new lows.

S&P 500, Nasdaq hit record closing peaks on eve of Fed meeting
 

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Comments (8)
Morne de Wet
Morne de Wet Jun 14, 2021 4:48PM ET
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Just add fuel and food cost to the CPI and then the Fed won't be able to hide behind transitory inflation.
Joel Schwartz
Joel Schwartz Jun 14, 2021 4:48PM ET
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Saudi Arabia just reported a 7.3% inflation rate in food YTD.
Sean Livingstone
Sean Livingstone Jun 14, 2021 4:46PM ET
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G7 - genocide 7.
Jon Bal
Jon Bal Jun 14, 2021 3:24PM ET
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housing solution is easy: 50 year mortgages
William Smith
William Smith Jun 14, 2021 1:33PM ET
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No, its falling because the USA came in last place at the G-7. No one their to look after America's interests. Just a bunch of American hating leftists giving away the stpre.
Andy Temp
Andy Temp Jun 14, 2021 1:33PM ET
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Because of statements like yours, there are more and more America haters. Trump laid the foundation for this. So don't complain. Themselves to blame.
Mark Jannetty
Mark Jannetty Jun 14, 2021 12:38PM ET
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I don't understand why you people don't believe the fed. inflation is transitory! but you might have to wait a decade for it to fall🤣
Jouni Matero
Jouni Matero Jun 14, 2021 12:38PM ET
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Or two, but overall you are right 🤣
Mart Bab
Rubberduck1973 Jun 14, 2021 12:20PM ET
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“Recent data has indicated that the U.S. economy is regaining momentum but not overheating, taming worries about inflation and sending the S&P 500 to an all-time high”. Strange because the S&P and other indexes went this far on the prospects of an overheating recovery. The V Shape recovery, remember! So now the recovery is slow, one would expect some profit taking. But not is this brave new world I guess. See you at the bottom of this madness. The only consistency here is BAD = GOOD
Jouni Matero
Jouni Matero Jun 14, 2021 12:20PM ET
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There will be blood.
ANIMESH GAUTAM
ANIMESH GAUTAM Jun 14, 2021 10:51AM ET
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fed play god while the world dies from inflation
Rob Fordham
Rob Fordham Jun 14, 2021 10:51AM ET
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Comments like this dont take into account that we just went thru something no one in living memory had seen before of course coming out of it needs to be managed and that is all fed is trying to do. Time will tell if they are successful but so far they have been
Mark Jannetty
Mark Jannetty Jun 14, 2021 10:51AM ET
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successful at keeping the wealthy happy. higher real costs are far more damaging for people on tight budgets
Jouni Matero
Jouni Matero Jun 14, 2021 6:58AM ET
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Focus turns only to bl.w even more air to this bubble. See how everything is turning worse except Covid cases, like reopening places would fix superior losses among common ppl, housing, inflation, materiaa like metals, jobs claims, debts, bonds,... List only goes on and yet still new ATH's like every day. Financial joke of the world, US stock market or should we say big banks' and hedge funds' money making machine.
Rob Fordham
Rob Fordham Jun 14, 2021 6:58AM ET
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So what is fed supposed to do raise interst rates and throw us into a depression? Come on
Jouni Matero
Jouni Matero Jun 14, 2021 6:58AM ET
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So u think pumping more and more printer money will fix this illusion? FED created it and now they need to face the consequences before it's too late (if not already). All valuations and prices rise just because printer money makes USD worthless. Buy power and savings however go to opposite direction. But everything's ok? Come On!!
Joel Schwartz
Joel Schwartz Jun 14, 2021 6:58AM ET
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Rob Fordham We either have a recession now or a lost decade depression like Japan had when the BOJ attempted what the FED is doing right now. I’ll take the recession over the depression.
 
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