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Slowing inflation growth lifts Dow, S&P to records

Stock MarketsAug 11, 2021 08:45PM ET
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© Reuters. FILE PHOTO: A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 5, 2021. REUTERS/Andrew Kelly

By Chuck Mikolajczak

NEW YORK (Reuters) - The Dow Jones Industrial Average and S&P 500 closed at record levels on Wednesday, as data indicated U.S. inflation growth may have peaked, while sectors tied to economic growth advanced on the heels of the passage of a large infrastructure bill.

The Labor Department said the consumer price index increased 0.5% last month after climbing 0.9% in June, the largest drop in month-to-month inflation in 15 months, easing concerns about the potential for runaway inflation.

"Certainly, the numbers show you more deceleration," said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC in New York.

"This number is going to put the Fed in a little bit of a quandary because they've gone out with all this rhetoric about tapering, about tightening rates, about being defensive and the inflation numbers aren't quite where they should be, but they’re certainly not showing that this thing is out of control."

Investors have been closely attuned to inflation pressures in recent months, concerned that a continual rise in prices could push the Federal Reserve to begin to scale down its ultra-accommodative policy stance earlier than anticipated.

Kansas City Federal Reserve President Esther George said on Wednesday that with the U.S. economy growing at a robust pace, it signals the "time has come to dial back the settings." In addition, Dallas Federal Reserve President Robert Kaplan said the central bank should announce its timeline to reduce its massive bondholding next month, with tapering to begin in October.

Unofficially, the Dow Jones Industrial Average rose 221.22 points, or 0.63%, to 35,485.89, the S&P 500 gained 11.11 points, or 0.25%, to 4,447.86 and the Nasdaq Composite dropped 23.91 points, or 0.16%, to 14,764.18.

After the U.S. Senate passed a $1 trillion bipartisan infrastructure package on Tuesday, an additional $3.5 trillion budget plan full of new domestic programs was also approved by the legislative body but disagreements within the Democratic party threatened the size and scope of the spending.

Shares of equipment maker Caterpillar Inc (NYSE:CAT) advanced and was the biggest boost to the Dow and peer Deere (NYSE:DE) & Co gained. Also moving higher were construction materials supplier Vulcan Materials (NYSE:VMC) Co and steelmaker Nucor Corp (NYSE:NUE), building on gains in the prior session on expectations of benefiting from infrastructure projects.

The materials and industrials were the best performing of the 11 major S&P sectors.

Technology stocks moved off earlier lows in the wake of a strong 10-year note auction, which sent yields lower after a five day streak of gains session amid optimism about a stronger economic reopening.

NortonLifeLock (NASDAQ:NLOK) Inc jumped after the cybersecurity company agreed to buy London-listed rival Avast for up to $8.6 billion.

Coinbase Global Inc climbed after the cryptocurrency exchange beat market estimates for second-quarter profit, helped by a near 38% jump in trading volumes on a sequential basis.

Virgin Galactic plunged after Morgan Stanley (NYSE:MS) downgraded the stock to "underweight" from "equal-weight", pointing to a prolonged period of no flights.

(This story corrects quote and attribution in third paragraph)

Slowing inflation growth lifts Dow, S&P to records
 

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Comments (10)
James Pattison
James Pattison Aug 12, 2021 9:01AM ET
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Bidenflation…
luckyyy gold
luckyyy gold Aug 12, 2021 12:19AM ET
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Misleading title. It doesnt slow it is still at 5%++. In reality, it is infacf double digit
Gurinder Sira
Gurinder Sira Aug 11, 2021 2:55PM ET
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They dont see inflation they dont see bubble .how we getting rich after record debt & no work for 1.5 year ??
Ronald Warren
Ronald Warren Aug 11, 2021 2:12PM ET
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Slowing inflation in what universe? All around me I see price increases of at least 20 to40% or more. Remember 5 years ago, a 5,000 but window A/C was $99 to $119. Last year $139. Today I walked in the door at Lowe's. $239. Look around you. Pay attention. It's out of control!!
mark twain
mark twain Aug 11, 2021 10:56AM ET
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What a system. Continuous sucking out of fiat purchasing power from main street into wall street.
JONAS BEZOS
JONAS BEZOS Aug 11, 2021 10:49AM ET
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greatest cheap money bubble in history
Jon Bal
Jon Bal Aug 11, 2021 10:16AM ET
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bad news for all those suckers on social security.  enjoy your 3% "cost of living adjustment"
Doo Sheng
Doo Sheng Aug 11, 2021 10:16AM ET
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why so toxic
Doo Sheng
Doo Sheng Aug 11, 2021 10:16AM ET
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why so toxic
wally spaller
wally spaller Aug 11, 2021 10:16AM ET
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its temporary DHA
Mitchel Pioneer
Mitchel Pioneer Aug 11, 2021 10:09AM ET
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New records of fraud and criminal manipulation in the biggest investment JOKE in the world.
Stan Smith
Stan Smith Aug 11, 2021 10:02AM ET
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"Inflation appeared to have peaked in July," So inflation is here to stay and that's good for Stocks. Absolutely absurd
Hafnium Halflife
Hafnium Halflife Aug 11, 2021 10:02AM ET
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U.S Stocks keep outperforming every other asset class in the world all the time 🤣🤣🤣
Hafnium Halflife
Hafnium Halflife Aug 11, 2021 10:02AM ET
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U.S Stocks keep outperforming every other asset class in the world all the time.
Arsenii Raspopov
Arsenii Raspopov Aug 11, 2021 10:02AM ET
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I mean… We just don’t have a choice. It’s either you let your purcase power be eaten by inflation, or you buy overbought assets 🙄
Joanna Yin
Joanna Yin Aug 11, 2021 9:29AM ET
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Priced in another 3.5T already
 
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