The S&P 500 and Dow continued their record run higher Wednesday on optimism that further spending on the economy would continue to support stocks just as early signs appear that inflation could be peaking.
The S&P 500 rose 0.2% after clinching an all-time intraday high of 4,449.20 earlier in the day. The Dow Jones Industrial Average rose 0.6%, or 215 points, to remain close its record intraday high of 35,495.55. The Nasdaq was down 0.2%.
The consumer price index rose 0.5% in July, as expected, ending a string of the four-straight monthly upside surprises. On an annualized basis, consumer prices rose 5.4% in July, slightly higher than expected. Still, the sign of the cooling price pressures has eased fears of runaway inflation.
“For now, the streak of outsized inflation surprises is over,” Jefferies (NYSE:JEF) said. “However, it remains to be seen whether the period of elevated price pressures is truly over.”
U.S. Treasury yields retreated from highs following the inflation report, but that didn’t stop the ascent in banking stocks, which have been riding the climb of yields higher.
Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and Bank of America (NYSE:BAC) were up more than 1%, pushing the broader financials higher.
Sentiment on stocks was also given a lift following further progress on the $1 trillion infrastructure bill.
After voting to pass the $1 trillion bipartisan infrastructure bill, which aims to improve the nation’s transportation, internet access and other projects, the Senate also passed a resolution to move ahead with a $3.5 trillion proposal focused on social initiatives.
Both bills have now moved to the House, but the fate of the smaller bipartisan infrastructure bill will depend on successful passage of the $3.5 trillion package. House speaker Pelosi has suggested that the $3.5 trillion bill will need to be passed before the House will vote on the infrastructure bill.
Energy stocks bounced from session lows, building on a surge from a day earlier as oil prices advanced after the White House called on OPEC and its allies to boost production to support the global economic recovery.
Petroleum data on Wednesday showed weekly crude stockpiles fell less than expected.
U.S. crude inventories fell by 448,000 barrels in the week to August 6, the EIA said in its Weekly Petroleum Status Report.
There was little sign of reprieve for tech stocks, with the megacap stocks mostly under pressure.
Microsoft (NASDAQ:MSFT, Apple (NASDAQ:AAPL) traded higher, while Facebook (NASDAQ:FB), Amazon.com (NASDAQ:AMZN), Google-parent Alphabet (NASDAQ:GOOGL) were in the red.
Tech has lost some favor with investors recently as seemingly highly valued sectors like growth tend to come under pressure in rising rate environments.
With expectations of choppy trading for the broader market ahead, some are suggesting that investors with heavy exposure to tech seek exposure to the Dow Jones Jones Industrial Average.
“[O]ne actionable idea may be for those investors heavily weighted in tech to consider allocating some funds over to the Dow Jones Jones Industrial Average,” Janney Montgomery Scott said.