S&P 500 Hits Record High as Wall Street Trusts the Fed on Inflation

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The S&P 500 index hit a record closing high on Thursday, despite the data showed that inflation rate has jumped to a higher-than-expected 5.0 percent in May. Wall Street ended firmly as market seems to have trusted the Federal Reserve's belief that the high inflationary situation would be temporary.

While the Nasdaq index made the most gains, powered by market-leading bluechips, Dow Jones and the smallcaps also advanced.

Core Consumer Price Index

The S&P 500 index rose to a record high just under 4,240, while the Nasdaq Composite surpassed 14,000.

US stocks — People queue beside the bronze bull in the Financial district which has become a Wall Street icon in New York City, July 18, 2013. U.S. stocks continued to rise on Thursday, sending the Dow Jones Industrial Average and the S&P 500 to fresh all-time highs, boosted by upbeat economic data and corporate earnings. IANS

The Labor Department said that excluding volatile food and energy prices, the "core" consumer price index (CPI) rose 3.8 percent over the last year, which was the largest 12-month increase since the period ending June 1992.

"We suspect today's data will spark a more involved discussion at next week's FOMC meeting about a potential tapering plan," said analyst Patrick O'Hare at Briefing.com, according to the AFP news agency.

'Whole Economy isn't Overheating'

The market is taking it in stride as it realizes the whole economy isn't overheating, said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, according to Reuters.

"Earlier this week we had extremely boring market days as we all had our eyes on the bullseye of this CPI report ... But once people looked under the surface, the majority of the higher inflation is due to the reopening, and stocks had a relief rally," added Detrick.

New York stock exchange — An electronic screen shows the trading information at the New York Stock Exchange in New York, the United States, Jan. 9, 2019. U.S. stocks closed higher on Wednesday after the summary of Federal Reserve's meeting held in December showed the central bank is patient on rate hikes. The Dow Jones Industrial Average increased 91.67 points, or 0.39 percent, to 23,879.12. The S&P 500 was up 10.55 points, or 0.41 percent, to 2,584.96. The Nasdaq Composite Index was up 60.08 points, or 0.87 percent, to 6,957.08. (Xinhua/Wang Ying/IANS)

Meanwhile, the US House of Representatives panel passed a $547 billion infrastructure spending bill, in boost to President Joe Biden's $2.3 trillion infrastructure package.

The market was also boosted by government data that showed that Americans' claims seeking unemployment benefits reached the lowest since the start of the coronavirus outbreak, in a significant sign of economic bounce back.

GameStop Bloodbath

While GameStop Corp saw a blood bath, falling as much as 30 percent, Boeing Co gained after following news that United Airlines was likely to place a multi-billion-dollar order.

Also, Pfizer Inc jumped following news that it was on road to get a $3.5 billion payment from the US government for the for 500 million COVID-19 vaccine.