By Stephen Culp
(Reuters) – Wall Street stocks rose on Thursday, with the S&P 500 on course to hit an all-time closing high, as the much-anticipated consumer price index report signaled that the current inflation wave will be transitory.
All three major U.S. stock indexes were higher, with market-leading megacap stocks putting the Nasdaq out front. But economically sensitive transports and smallcaps were in negative territory.
The Labor Department’s consumer price index (CPI) data came in above consensus and added fodder to the debate over whether current price spikes could morph into long-term inflation, despite the Federal Reserve’s assurances to the contrary.
But a closer look showed that much of the price surge came from items such as commodities and airfares, and is therefore likely to be temporary.
“Another upward surprise, but a key point is that quite a lot of it is still in the transitory category so I don’t think the Fed will be particularly concerned,” said Colin Asher, senior economist at Mizuho in London.
“Generally, I think the Fed is getting some traction on its message that the inflation pressures are transitory,” Asher added. “(This CPI print) must be close to being the high point.”
A U.S. House of Representatives committee passed a $547 billion infrastructure spending bill targeting surface transportation, adopting some of President Joe Biden’s proposals as part of his broader $2.3 trillion infrastructure package.
Still, industrials and transports, sectors that stand to benefit from infrastructure spending, were in negative territory.
The Dow Jones Industrial Average rose 126.15 points, or 0.37%, to 34,573.29; the S&P 500 gained 25.09 points, or 0.59%, at 4,244.64; and the Nasdaq Composite added 108.76 points, or 0.78%, at 14,020.51.
Among the 11 major sectors of the S&P 500, healthcare enjoyed the largest percentage gains.
But interest-rate sensitive financials was the biggest loser, weighed by easing U.S. Treasury yields.
GameStop Corp, the stock most closely associated with the social media-driven “meme stock” phenomenon, dropped 22.0% after the videogame retailer said it may sell new shares.
Other stocks that have benefited from the retail short-squeeze rally, including Clover Health Investments Corp, AMC Entertainment Holdings, Bed Bath & Beyond Inc and GEO Group, also fell, between 8% and 18%.
Boeing Co rose 0.9% after sources told Reuters that United Airlines was in talks to place a multi-billion-dollar order for single-aisle jets potentially split between Boeing and Europe’s Airbus.
Pfizer Inc rose 1.9% on news that the United States would pay the drugmaker about $3.5 billion for 500 million COVID-19 vaccine doses that it intends to donate to the 100 lowest income countries.
Advancing issues outnumbered decliners on the NYSE by a 1.39-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored advancers.
The S&P 500 posted 57 new 52-week highs and no new lows; the Nasdaq Composite recorded 92 new highs and 11 new lows.
(Reporting by Stephen Culp; Additional reporting by Ambar Warrick and Sujata Rao; Editing by Richard Chang)
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