S&P 500 climbs to another record and is heading for its best week since April

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US stocks rose on Friday, with the S&P 500 building on its rally into records as investors bet that higher inflation will be temporary as the economy continues to recover from the pandemic.

The broad equity benchmark rose 0.2% to hit another all-time high. The Dow Jones Industrial Average rose 160 points, or 0.5%, while the Nasdaq Composite rose 0.2%.

Wall Street extended gains after a key inflation indicator the Federal Reserve uses to set policy rose 3.4% in May, the fastest increase since the early 1990s, the Department of Commerce reported Friday. The value corresponded to the expectations of the economists surveyed by Dow Jones. The core index rose 0.5% during the month, which was actually below the estimate of 0.6%.

The rise in the core price of consumer spending reflects the rapid pace of economic expansion and the resulting price pressures, and reinforces how far the nation has come since the 2020 pandemic shutdown.

“This supported the Fed’s argument that inflation is temporary and will help allay fears that we are witnessing uncontrolled inflation,” said Anu Gaggar, senior global investment analyst for the Commonwealth Financial Network. “This should continue to support risk assets like stocks.”

The S&P 500, which closed on a record Thursday, is up 2.6% this week, which would be its best gain since early April. The Dow is up 3.2% this week and the Nasdaq is up 2.6% since last Friday.

Nike stock rose 14%, which helped boost sentiment for the Dow. The company reported profits and revenues that exceeded Wall Street estimates. Digital sales have also increased by 41% since last year and by 147% compared to two years ago.

FedEx, on the flip side, was down 4% despite outperforming in earnings and gains. FedEx also gave a strong outlook for the year.

Trading volume could increase on Friday as FTSE Russell will rebalance its US stock indices at the close of the market. Bank of America estimates a total of 625 changes to the Russell indices, including the Russell 1000 and Russell 2000, will result in more than $ 170 billion worth of stocks changing hands.

The Federal Reserve announced that the banking sector could easily withstand a severe recession. The Fed announced when it released the results of its annual stress test that the 23 institutions in the 2021 test had remained “well above” the minimum capital requirement during a hypothetical economic downturn. The decision paved the way for banks to increase dividends and buy back more shares that were suspended during the pandemic.

President Joe Biden announced Thursday that the White House had signed an infrastructure deal with a non-partisan group of senators. Legislators have worked for weeks to put together a roughly $ 1 trillion package that could get through Congress with support from both parties. Among other things, the framework provides for new expenditures of 579 billion US dollars for transport such as roads, bridges and rail, the infrastructure for electric vehicles and electric mass transit.

Caterpillar shares rose 2.6% on Thursday on optimism about an infrastructure deal. Shares were up another 1% on Friday.

The stock market bounced back from last week’s swoon caused by worries about a more restrictive Federal Reserve. Last week the Dow fell 3.5% and the S&P 500 lost 1.9% as the Fed raised its rate hike schedule.

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