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Wall Street closed marginally higher on Wednesday as positive effects of strong economic recovery were partially offset by market participants' growing concerns over an impending inflation. All the three major stock indexes ended in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.1% to close at 34,600.38, maintaining five-day winning streak. Notably, 20 components of the 30-stock index ended in the green while 10 in red. The tech-heavy Nasdaq Composite finished at 13,756.33, rising 0.1% due to good performance by large-cap stocks.
Meanwhile, the S&P 500 was up 0.1% to end at 4,208.12. The Energy Select Sector SPDR (XLE) and the Real Estate Select Sector SPDR (XLRE) rallied 1.9% and 1.4%, respectively. Notably, six out of eleven sectors of the benchmark index closed in the green while five in red.
The fear-gauge CBOE Volatility Index (VIX) was down 2.4% to 17.48. A total of 12.2 billion shares were traded on Wednesday, higher than the last 20-session average of 10.5 billion. Advancers outnumbered decliners on the NYSE by a 1.34-to-1 ratio. On Nasdaq, a 1.01-to-1 ratio favored advancing issues.
Inflationary Expectations
The U.S. economy is currently facing challenges of both demand-pull and cost-push inflation. The number of new coronavirus cases is currently the lowest in the United States during pandemic-era. The great reopening of the economy buoyed by the nationwide deployment of COVID-19 vaccines, record-breaking savings due to lockdown-imposed restrictions, massive fiscal and monetary stimulus and robust pent-up demand have resulted in demand-pull inflation.
On the other side, the pandemic-led disruptions in the supply chain system resulted in a shortage of inputs, especially high-end chipsets, among final product manufacturers. This in turn raised the prices of inputs that forced producers to increase prices of the final products.
Moreover, the shortage of skilled manpower forced businesses to increase wages and other benefits to attract laborers to meet the growing demand for their products. The combined effect is to raise the cost of production and the prices of final products.
The consumer price index (CPI) — popularly known as household inflation — jumped 4.2% year over year in April, its highest since September 2008. The core CPI (excluding volatile food and energy items) surged 0.9% in April after gaining 0.3% in March, marking the largest monthly gain since 1981.
The PCE (personal consumption expenditure) price index jumped 3.6% year over year in April, marking its biggest monthly gain since September 2008. The core PCE inflation (excluding volatile food and energy prices) gained 0.7% in April. Year over year, the core PCE inflation — Fed's favorite gauge of inflation — climbed 3.1% in April, reflecting the highest monthly gain since July 1992. The figure was well above the Fed's target rate of 2%.
Fed's latest Beige Book report released on Wednesday also mentioned about growing inflationary pressure on the economy. The Fed has so far maintained that any inflation above its targeted 2% in 2021 will be transitory. However, it did signal that if economic recovery remains faster than expected and the price level continues to rise, the Fed may consider readjusting its policy variables.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Image: Bigstock
Stock Market News for Jun 3, 2021
Wall Street closed marginally higher on Wednesday as positive effects of strong economic recovery were partially offset by market participants' growing concerns over an impending inflation. All the three major stock indexes ended in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.1% to close at 34,600.38, maintaining five-day winning streak. Notably, 20 components of the 30-stock index ended in the green while 10 in red. The tech-heavy Nasdaq Composite finished at 13,756.33, rising 0.1% due to good performance by large-cap stocks.
Notably, major gainer of the Nasdaq Composite was Moderna Inc. (MRNA - Free Report) that surged 3.8%. Moderna carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile, the S&P 500 was up 0.1% to end at 4,208.12. The Energy Select Sector SPDR (XLE) and the Real Estate Select Sector SPDR (XLRE) rallied 1.9% and 1.4%, respectively. Notably, six out of eleven sectors of the benchmark index closed in the green while five in red.
The fear-gauge CBOE Volatility Index (VIX) was down 2.4% to 17.48. A total of 12.2 billion shares were traded on Wednesday, higher than the last 20-session average of 10.5 billion. Advancers outnumbered decliners on the NYSE by a 1.34-to-1 ratio. On Nasdaq, a 1.01-to-1 ratio favored advancing issues.
Inflationary Expectations
The U.S. economy is currently facing challenges of both demand-pull and cost-push inflation. The number of new coronavirus cases is currently the lowest in the United States during pandemic-era. The great reopening of the economy buoyed by the nationwide deployment of COVID-19 vaccines, record-breaking savings due to lockdown-imposed restrictions, massive fiscal and monetary stimulus and robust pent-up demand have resulted in demand-pull inflation.
On the other side, the pandemic-led disruptions in the supply chain system resulted in a shortage of inputs, especially high-end chipsets, among final product manufacturers. This in turn raised the prices of inputs that forced producers to increase prices of the final products.
Moreover, the shortage of skilled manpower forced businesses to increase wages and other benefits to attract laborers to meet the growing demand for their products. The combined effect is to raise the cost of production and the prices of final products.
The consumer price index (CPI) — popularly known as household inflation — jumped 4.2% year over year in April, its highest since September 2008. The core CPI (excluding volatile food and energy items) surged 0.9% in April after gaining 0.3% in March, marking the largest monthly gain since 1981.
The PCE (personal consumption expenditure) price index jumped 3.6% year over year in April, marking its biggest monthly gain since September 2008. The core PCE inflation (excluding volatile food and energy prices) gained 0.7% in April. Year over year, the core PCE inflation — Fed's favorite gauge of inflation — climbed 3.1% in April, reflecting the highest monthly gain since July 1992. The figure was well above the Fed's target rate of 2%.
Fed's latest Beige Book report released on Wednesday also mentioned about growing inflationary pressure on the economy. The Fed has so far maintained that any inflation above its targeted 2% in 2021 will be transitory. However, it did signal that if economic recovery remains faster than expected and the price level continues to rise, the Fed may consider readjusting its policy variables.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>