Stocks rose Thursday as traders digested a key print on inflation, which showed consumer prices rose faster than expected as demand surged during the recovery.
The S&P 500 rose to a fresh all-time high. The Nasdaq topped 14,000 for the first time since May 3, and the Dow also increased.
The Bureau of Labor Statistics' May consumer price index registered a faster than expected rise in inflation last month. Headline consumer prices were up by 5.0% over last year, topping Wall Street's estimates for 4.7% and accelerating from April's 4.2% rise. This also marked the fastest increase in the CPI since 2008. And excluding more volatile food and energy prices, the so-called core consumer price index was up 3.8%, also ramping up from the 3.0% increase from April.
Treasury yields moved higher following the report after dipping a day earlier following a more tepid than expected print on consumer price inflation out of China. After the U.S. CPI report on Thursday, the 10-year Treasury yield jumped more than 4 basis points to above 1.53%, reversing course after falling below 1.5% a day earlier.
The consumer price index serves as just one measure of price trends in the U.S. economy. However, it has taken on added significance as supply chain disruptions and shortages and surging demand during the recovery have begun to produce discernible price increases for consumers. And recently, both producer price indices and core personal consumption expenditures have come in stronger than expected. For investors, the stickiness of recent inflationary trends has been a point of considerable attention, given that longer-lasting price increases could spur a move by the Federal Reserve to tweak its ultra-accommodative monetary policies.
"In the past two months, everything the market priced in has essentially happened. COVID is effectively over here in the United States, we're not getting anymore stimulus, the Fed is going to start tapering," Tom Essaye, president of Sevens Report Research, told Yahoo Finance on Wednesday. "So the market and investors are sitting around and saying, what's next? Well the what's next is, is inflation temporary ... and more importantly, how is the Fed going to handle tapering, and are they going to mess it up?"
"I think until we get more clarity on that, we're bumping around," he said.
Meanwhile, the so-called "meme stock" trade extended a stretch of volatility from earlier this week. Shares of GameStop (GME) slid more than 22% intraday on Thursday after the company said it was filing to be able to issue up to 5 million shares of its common stock, with the news overshadowing its stronger-than-expected first-quarter sales results. The video game retailer also announced it appointed two former Amazon executives to serve as its chief executive officer and chief financial officer. Other so-called "meme stocks" that recently became popular with traders on Reddit also gave back some gains after rallying on Wednesday, including Geo Group (GEO) and Aethlon Medical (AEMD).
4:03 p.m. ET: Stocks close higher, S&P 500 sets new record high as investors look past hotter-than-expected inflation data
Here were the main moves in markets as of 4:03 p.m. ET:
S&P 500 (^GSPC): +19.75 (+0.47%) to 4,239.30
Dow (^DJI): +19.75 (+0.06%) to 34,466.89
Nasdaq (^IXIC): +108.58 (+0.78%) to 14,020.33
Crude (CL=F): +$0.20 (+0.29%) to $70.16 a barrel
Gold (GC=F): +$5.40 (+0.28%) to $1,900.90 per ounce
10-year Treasury (^TNX): -3 bps to yield 1.4590%
3:52 p.m. ET: Chinese ride-hailing company Didi files for IPO
The Chinese ride-hailing company Didi Chuxing Technology filed an S-1 prospectus withe the U.S. Security and Exchange Commission Thursday afternoon, signaling its intent to go public.
The company said it intends to list on the Nasdaq in the U.S. It posted an adjusted EBITA loss of 5.5 billion Renminbi, or roughly $860 million, for the first quarter of 2021, which narrowed over the prior year. First quarter revenue of 42.2 billion Renminbi, or $6.4 billion, more than doubled over the previous year. Annual active users were 493 million for the 12 months ended March 31.
1:00 p.m. ET: Health-care, consumer staples stocks lead the way higher as S&P 500 sets new high
The three major indexes held onto gains in intraday trading on Thursday as risk assets continued to shake off concerns over a hotter-than-expected print on consumer price inflation.
The S&P 500 rose to a record intraday high, topping its previous record level from early May. The health care, real estate and consumer staples sectors outperformed, while financials, industrials and materials lagged.
9:30 a.m. ET: Stocks open higher
Here's where markets were trading after the opening bell:
S&P 500 (^GSPC): +16.35 (+0.4%) to 4,235.90
Dow (^DJI): +204.26 (+0.6%) to 34,651.40
Nasdaq (^IXIC): +6.81 (+0.05%) to 13,921.62
Crude (CL=F): +$0.50 (+0.71%) to $70.46 a barrel
Gold (GC=F): -$0.90 (-0.05%) to $1,894.60 per ounce
10-year Treasury (^TNX): +3 bps to yield 1.519%
8:58 a.m. ET: Consumer prices rose by the most since 2008 in May as inflationary pressures ramp
Consumer prices rose faster than expected in May, with supply and demand mismatches generating a jump in inflation in the early innings of the economic recovery coming out of the pandemic.
The Bureau of Labor Statistics' consumer price index rose 0.6% month-on-month in May and 5.0% year-on-year, with the latter metric rising by the most in over a decade. Excluding food and energy prices, the core measure of consumer price inflation was up 3.8%, marking the biggest jump since 1992.
One of the major contributing factors to the increase was in used cars and trucks, with prices for these goods adding to April increases. The index for used cars and trucks was up 7.3% in May over April to account for about one-third of the total increase in CPI.
Elsewhere, the food index rose 0.4% to match its April month-on-month rise. Fuel oil also gained 2.1%.
"Inflation is heating up as the labor markets tighten up and with commodities and parts in short supply this inflation spike could persist for longer than Federal Reserve officials believe," Chris Rupkey, chief economist at FWDBONDS, wrote in an email. "The inflation data today are red hot and this makes it a virtual certainty that the Federal Reserve is going to talk about throttling back the biggest QE [quantitative easing] stimulus program in its history."
8:30 a.m. ET: Jobless claims fall for sixth straight week to new pandemic-era low
Weekly jobless claims dipped for a sixth straight week to reach a new pandemic-era low during the period ended June 5, the Labor Department said Thursday.
Initial filings fell to 376,000 last week from the 385,000 reported during the previous week. Consensus economists were looking for 370,000 new filings, according to Bloomberg data.
Continuing jobless claims came in below estimates, totaling 3.499 million during the week ended May 29. This fell from 3.757 million from the prior week, and was below the 3.665 million consensus economists were looking for.
7:22 a.m. ET Thursday: Stock futures mixed ahead of jobless claims, CPI data
Here's where markets were trading ahead of the opening bell on Thursday:
S&P 500 futures (ES=F): 4,221.5, +3 points (+0.07%)
Dow futures (YM=F): 34,509.00, +72 points (+0.21%)
Nasdaq futures (NQ=F): 13,784.00, -30.25 points (-0.22%)
Crude (CL=F): +$0.16 (+0.23%) to $70.12 a barrel
Gold (GC=F): -$14.40 (-0.76%) to $1,881.10 per ounce
10-year Treasury (^TNX): +1.2 bps to yield 1.501%
6:15 p.m. ET Wednesday: Stock futures trade slightly higher
Here's where markets were trading Wednesday evening:
S&P 500 futures (ES=F): 4,223.25, +4.75 points (+0.11%)
Dow futures (YM=F): 34,479.00, +42 points (+0.12%)
Nasdaq futures (NQ=F): 13,819.50, +5.25 points (+0.04%)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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