Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

S&P 500 Shrugs off Inflation Spike as 'Don't Fight the Fed' Idea Returns

Stock MarketsJun 10, 2021 02:47PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 remained near all-time highs Thursday, after a hot inflation report failed to coax the bond bears out of hiding as yields fell, suggesting that the idea of "don't fight the Fed" is gaining popularity once again.

The S&P 500 rose 0.49% to remain close to its earlier intraday record high of 4,249.97. The Dow Jones Industrial Average was up 0.22%, or 76 points, and the Nasdaq Composite was up 0.72%.

The Labor Department said on Thursday its consumer price index rose 0.6% last month after edging up 0.9% in April. The uptick in consumer prices in May lifted the year-on-year increase in the CPI to 5% from 4.2% in April, the highest rate since the 1980s.

But Treasury yields fell as the hottest inflation report in decades failed to revive fears that the Federal Reserve will tighten policy sooner.

The bond vigilantes – who were betting against the Federal Reserve view of transitory inflation – have been reining in their bearish bets on bonds on concerns the Fed may not be as behind the curve as feared.

"[I]f you're betting against the Fed you tend to not be accurate," Johan Grahn, Head of ETF Strategy at Allianz said in an interview with Investing.com on Thursday. "If you are accurate and it's typically for a short, short moment, then everybody else would bet in the same direction so it's a really slippery slope to go down."

There appears to be good reason to refrain from betting against the Fed's call on inflation. The economy is opening up, driving consumers back to areas that were shuttered during the pandemic such as restaurants and international travel, but this spike in prices doesn't matter yet as wages aren't rising.

"The decision making is happening at the consumer level, but it's not to spend more money necessarily, it's more about deciding where to spend the money, " Grahn added. "The consumer will have to decide whether they want to get on two flights for $300 apiece, for example, or if they want to get on one flight, which could now be $450 apiece instead."

Megacap tech stocks flourished against the backdrop of falling rates, keeping the broader market grinding higher.

Apart from Apple (NASDAQ:AAPL), the Fab 5 including Google-parent Alphabet (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Facebook (NASDAQ:FB) were in the green.

Health care stocks, however, were the standout performer on the day, led by a jump in Bristol-Myers Squibb Company (NYSE:BMY) and Bio-Rad Laboratories Inc (NYSE:BIO).

Bristol-Myers Squibb jumped more than 3% after reporting a positive update from a late-stage trial of its cancer drug Breyanzi.

Energy stocks were higher as oil prices recovered from an intraday dip following signs Iranian nuclear deal talks could resume after the U.S. lifted sanctions on several former Iranian officials and energy firms.

In meme mania news, GameStop (NYSE:GME), fell 25% after a slew of updates including second-quarter results that topped expectations, the appointment of two former Amazon executives, and plans to sell another 5 million shares.

S&P 500 Shrugs off Inflation Spike as 'Don't Fight the Fed' Idea Returns
 

Related Articles

S&P 500 in Holding Pattern Ahead of Fed Decision
S&P 500 in Holding Pattern Ahead of Fed Decision By Investing.com - Jul 28, 2021 1

By Yasin Ebrahim Investing.com – The S&P 500 remained in a holding pattern Wednesday, as investors awaited the Federal Reserve’s monetary policy decision and commentary from Fed...

The Bullish Case for Abbott Laboratories
The Bullish Case for Abbott Laboratories By StockNews - Jul 28, 2021

Abbott Laboratories (NYSE:ABT) is a renowned player in the medical devices and ancillary healthcare products industry with an impressive dividend payout history. We think the...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Semih Unalan
Semih Unalan Jun 11, 2021 2:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Postşoned demand, people. Nothing to see here, move along.
Ted Byrley
Ted Byrley Jun 10, 2021 6:09PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Today, the news media showed their utter stupidity.  If inflation continues to rise, (even if interest rates fall because the economy is going into the dumpers anyway), the Fed will be forced to do more sneaky quantitative  tightening even though it will make it terrible in the short-run.  If they add money, it will not not help either.  Pushing on a string does nothing.  It is all too late.  We are done for now it seems.
NUNO LOUREIRO
NUNO LOUREIRO Jun 10, 2021 4:35PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Don't fight the FED.... So this is the ridiculous excuse they come up with to justify this nonsense..
Stan Smith
Stan Smith Jun 10, 2021 4:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If they keep up with these ridiculous headlines there will be a revolution. The US is spiraling down the toilet and articles like this just make light of it...
Jouni Matero
Jouni Matero Jun 10, 2021 3:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Shrugging off is the new Black in Wall Street slang. All neganews are now "shrugged off" and retailers suffer while billionaires enjoy gains.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email