As investors dismissed the high inflation data in the United States and turned to pay attention to President Joe Biden’s stimulus agreement, the Wall Street stock market further reached record levels on Friday.
The S&P 500 index rose 0.3% in the afternoon in New York, making the blue chip index expected to hit a record high. The broad benchmark rose 2.7% a week, its best performance since early April, while the technology-focused Nasdaq Composite Index was flat intraday.
“If promulgated, [the infrastructure plan] A report by Evercore ISI Research predicts that when the peak effect is reached in 2025-26, GDP will increase by about 1%.
Infrastructure transactions overshadow data released on Friday, showing that core personal consumption expenditure in the United States-the Fed’s preferred price increase indicator-reached 3.4% in the 12 months to May, the largest annual increase in 29 years.
However, the month-on-month increase in inflation was slightly lower than economists expected, which may reduce the pressure on the U.S. central bank to change its ultra-loose monetary policy.
Keith Parker, chief U.S. equity strategist at UBS, said: “We see a little relief that the stock market is also supported by infrastructure news.” He added that it is important for companies to reap the benefits of the reopening of the US economy. The expectation of reporting strong second-quarter earnings is also a “strong tailwind.”
After the release of inflation data, government debt prices weakened. The 10-year U.S. Treasury bond yield was 1.53%.
Investors holding bonds are more sensitive to inflation than stocks, and they worry that price increases will become more permanent. A survey released by the Bank of America on Friday showed that for the first time since April 2018, inflation has become the most worrying issue for credit investors.
“There is no doubt that inflation data will continue to remain high in the coming months,” said Francesco Sandrini, senior multi-asset strategist at fund manager Amundi.
He said that after Fed officials have mixed information on whether rising prices will lead to tightening of monetary policy, “but the market is trying to find confidence in countermeasures.”
Federal Reserve Chairman Jay Powell continues to describe the soaring prices as “temporary,” but St. Louis Fed Chairman James Brad said on Thursday that he believes that price increases may be problematic. “A new risk is that inflation may continue to unexpectedly rise,” he said in a report. Promotion meeting.
Schroder strategist Sean Markowicz said: “What we may see next year is that rising commodity prices will drive up input prices, which in turn will drive up consumer prices, which in turn will drive up wages.”
Markowicz added that this leaves the question whether Powell’s “temporary” inflation “means 6, 12, 18 months or more.”
In Europe, the Stoxx 600 index closed up 0.1%, making the continental benchmark index up 1.2% this week.
The recent increase in oil prices has accelerated, with Brent crude oil prices rising further by 0.5% to over US$76 per barrel, the highest level since October 2018.
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