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Stock Market News for Jun 11, 2021

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Benchmarks closed in the green as investors shrugged off inflation report in agreement with the Fed’s argument that jump in prices is temporary as demand exceed supply on account of the economy’s recovery from the pandemic.

The Dow Jones Industrial Average (DJI) rose 19.10 points or 0.06%, to close at 34,466.24 and the S&P 500 rose 19.63 points or 0.5%, to close at 4,239.18. The Nasdaq Composite Index closed at 14,020.33, adding 108.58 points or 0.8%. The fear-gauge CBOE Volatility Index (VIX) decreased 10%, to close at 16.10. Advancing issues outnumbered declining ones for 1.25-to-1 ratio on the NYSE, while a 1.13-to-1 ratio on the Nasdaq favored advancers.

How Did the Benchmarks Perform?

On Thursday, the S&P 500 exceeded past its record of 4,232.60 set on May 7. Seven of the 11 major sectors of the broader index closed in the green, led by 1.7% rise in the health sector, followed by 1% gain in real estate. However, gains were capped by a 1.1% decline in financials.

The Dow ended nearly flat yesterday, among its biggest gainers were Walgreens Boots Alliance, Inc. (WBA - Free Report) and Merck & Co., Inc. (MRK - Free Report) that closed 3.5% and 2.8% higher, respectively. Walgreens Boots Alliance carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Nasdaq was pushed higher led by more than 4% gain in shares of Align Technology, Inc. (ALGN - Free Report) , MercadoLibre, Inc. (MELI - Free Report) and Adobe Inc. (ADBE - Free Report) . And backed by more than 3% rise in shares of Illumina, Inc. (ILMN - Free Report) and Splunk Inc. (SPLK - Free Report) .

Overall, the S&P 500 posted 58 new 52-week highs and no new lows, while the Nasdaq Composite recorded 102 new highs and 14 new lows. A total of 10.64 billion shares were traded on Thursday, lower than the last 20-session average of 10.67 billion.

Inflation Rate Touch 13-year High

On Thursday, the U.S. Bureau of Labor Statistics reported that surge in cost of living drove the pace of inflation to a 13-year high of 5%, as the economy recovers from the coronavirus pandemic. The inflation metrics, consumer price index (CPI) jumped 0.6% last month, surpassing the consensus estimate of 0.4% rise, but lower than April’s 0.8% rise. Core CPI that excludes volatile food and energy costs jumped 0.7%, surpassing the consensus estimate of 0.5%, however lower than the prior month’s 0.9% rise.

The report also states that cost of used vehicles, food, furniture, clothes, plane tickets, recreational goods, insurance and alcohol have all risen in the month of May. Markets have been volatile in the past weeks as fears of spike in inflation weighed on investors sentiments. However, stocks moved north as investors agreed with the Federal Reserve that rise in prices likely reflects a temporary phenomenon, a transitionary phase related to the pandemic-led shortage in supply.

Initial Claim at Lowest Level Since March 2020

The U.S. Labor Department reported yesterday that initial weekly jobless claim fell to the lowest level of claims since March 2020. For the week ending Jun 5, initial claims fell by 9,000 to 376,000, slightly higher than the consensus estimate of 367,000, but lower than the prior week’s 385,00 new claims. Meanwhile, the number of continuing claims also fell by 258,000 to a seasonally adjusted 3.5 million in the week ended May 29, at the lowest level since the pandemic hit.

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