Dow hits record high as inflation fears recede after data
TThe blue-chip Dow index hit a record high on Wednesday after tepid consumer prices data for February eased concerns about a spike in inflation and elevated bond yields.
Accelerated vaccine rollouts and a monster fiscal stimulus on the horizon have raised bets on higher inflation, triggering a spike in Treasury yields that pushed the tech-heavy Nasdaq down as much as 12% from its Feb. 12 record close last week.
On Wednesday, the 10-year U.S. Treasury yield slipped from its session highs after data indicated the core consumer prices index, which excludes volatile items such as food and energy, rose less than expected last month.
Focus is on an auction of U.S. 10-year bonds later in the day for clues to where yields in the recently volatile market may be headed.
“Markets are rising on three factors - tame inflation, passage of the coronavirus aid package and a strong rally in tech stocks in the previous session,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“We have a bond auction up ahead which is expected to go well. If it’s a sloppy auction we could see yields rise again and that could take some enthusiasm out of the market. ”AmerisourceBergen Corp gained 7.3% after the U.S. drug wholesaler said it would buy Walgreens Boots Alliance’s drug distribution business for $6.5 billion to expand in Europe. Dow component Walgreens rose 4%.
Advancing issues outnumbered decliners for a 2-to-1 ratio on the NYSE and a 2.5-to-1 ratio on the Nasdaq.
The S&P 500 posted 75 new 52-week highs and no new low, while the Nasdaq recorded 370 new highs and 13 new lows.
Bitcoin soared above $50,000 to an all-time high, adding steam to a rally fueled by signs that the world’s biggest cryptocurrency is gaining acceptance among mainstream investors and companies.
That super-easy stance, coupled with the Biden administration’s proposed $1.9 trillion spending bill for pandemic relief, has left some investors fretting over a coming surge in inflation.
The MSCI’s global stock index was down 0.42% at 682.18. The index touched a record intra-day high of 687.26 on Tuesday, before erasing gains to snap an 11-day winning streak.
Meanwhile, bank strategists are raising their estimates for U.S. corporate profitability this year following surprisingly strong fourth-quarter earnings and growing optimism about an economic rebound.
At 11:46 a.m. ET, the Dow Jones Industrial Average rose 376.12 points, or 1.18%, to 32,208.86, the S&P 500 gained 23.42 points, or 0.60%, to 3,898.86 and the Nasdaq Composite gained 28.50 points, or 0.21%, to 13,102.33.
The Nasdaq extended gains after logging its best one-day percentage jump in four months on Tuesday, helped by a rise in momentum stocks that had recently taken a beating due to higher yields.
Amazon.com Inc, Microsoft Corp and Tesla Inc extended gains by 0.3% to 1.7% from the previous session, while economy-linked industrial, materials and financial indexes hovered near record highs.