NEW YORK, April 10 — The S&P 500 and the Dow notched record closing highs yesterdat after solid US inflation data and an uptick in Treasury yields suggested the economic recovery from the pandemic-related recession was gaining momentum.
“(It was) a fairly quiet Friday with low volume, a welcome change from 12 months ago,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.
“Today was all about inflation,” Carter added. “Despite today’s higher PPI number, equity markets are starting to begrudgingly believe the Fed is in no rush to raise interest rates.”
All three major US stock indexes posted weekly gains as upbeat economic data boosted risk appetite ahead of first-quarter earnings.
Transports, seen as a proxy for economic health, advanced for their 10th week in a row.
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“Cyclical parts of the market like transports are being driven higher due to strong vaccination rates in the US, which suggests the economic reopening may accelerate,” Carter said.
A Labour Department report showed producer prices rose last month at twice the speed of February’s growth, reviving some inflation worries.
US Federal Reserve Chairman Jerome Powell offered assurances on Thursday that the central bank is far more concerned about the recent uptick in Covid-19 infections than inflationary pressures.
“Powell is not overly concerned about long-term inflation,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. “The Fed has stressed from the very beginning these increases will be transitory.”
The Dow Jones Industrial Average rose 297.03 points, or 0.89 per cent, to 33,800.6, the S&P 500 gained 31.63 points, or 0.77 per cent, to 4,128.8 and the Nasdaq Composite added 70.88 points, or 0.51 per cent, to 13,900.19.
European stocks ended nominally higher, but marked their longest winning streak since November 2019 on rising hopes of a rapid economic rebound.
The pan-European STOXX 600 index rose 0.08 per cent and MSCI’s gauge of stocks across the globe gained 0.32 per cent.
Emerging market stocks lost 0.97 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.81 per cent lower, while Japan’s Nikkei rose 0.20 per cent.
US Treasury yields rose in the wake of the PPI report, which provided further evidence that the world’s largest economy was on a stable road to recovery from the pandemic.
Benchmark 10-year notes last fell 7/32 in price to yield 1.655 per cent, from 1.632 per cent late on Thursday.
The 30-year bond last fell 3/32 in price to yield 2.327 per cent, from 2.322 per cent late on Thursday.
The dollar inched higher against a basket of world currencies as inflation data lifted bond yields, but the greenback had its softest week of the year due to better-than-expected economic data and the dovish Fed.
The dollar index rose 0.11 per cent, with the euro down 0.07 per cent to US$1.1904 (RM4.92).
The Japanese yen weakened 0.35 per cent versus the greenback at 109.65 per dollar, while Sterling was last trading at US$1.3709, down 0.17 per cent on the day.
Crude oil prices dropped on rising supply amid a mixed picture on demand recovery from the Covid-19 slump.
US crude dipped 0.47 per cent to settle at US$59.32 per barrel, while Brent crude settled at US$62.95 per barrel, falling 0.4 per cent on the day.
Gold withdrew from Thursday’s one-month peak, weighed down by a rebounding dollar and rising Treasury yields. Still, the safe-haven metal appears headed for its first weekly gain in three.
Spot gold dropped 0.8 per cent to US$1,742.64 an ounce. — Reuters