The Dow rose 220 points to a new record after the inflation report was not as bad as feared


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Shares rose on Wednesday after inflation jumped, but not as much as investors feared when they took down volatile food and energy prices.

The Dow Jones Industrial Average strengthened 220.30 points, or 0.62%, to 35,484.97, closing at a new record. The 30-share dow has been withdrawn by names like Caterpillar i Home Depot. The S&P 500 traded 0.25% at 4,447.73, also reaching an all-time record. The technologically heavy Nasdaq Composite traded 0.16% lower at 14,765.14.

July consumer price index released on Wednesday, it showed prices jumped 5.4% from last year, compared to expectations of 5.3%, according to economists polled by Dow Jones. The government said the CPI increased by 0.5% on a monthly basis in July.

But investors have concentrated on the core inflation rate, which could signal that inflation will remain moderate and the economy will remain strong. Excluding energy and food prices, the CPI rose 0.3% last month, below the expected increase of 0.4%. Base prices continued to jump 4.3% on an annual basis.

“It is encouraging to see the pace slow down from month to month and support the idea that recent price increases are transient and associated with reopening,” said Mike Loewengart, CEO of Investment Strategy at E * TRADE Financial. “So even though inflation is still hot, it’s likely that investors are already appreciating it.”

Prices of used cars, which investors see as one of the signs of uncontrolled inflation, rose by only 0.2% in July, after jumping by more than 10% in the previous month.

The data “should help alleviate investors’ fear that the Fed is too relaxed in terms of inflationary pressures, ”said Seema Shah, chief strategist at Principal Global Investors. “The details of the data release point to some relief in reopening and a rise in prices caused by a lack of supply, and roughly suggest that inflation may have peaked. Investors at the transit camp will feel a bit justified.”

The inflation reading supported the Federal Reserve’s belief that high price pressures were “transient” as the economy recovered from the recession caused by the pandemic.

The 10-year treasury yield in decline amid inflation reports, as well as at a strong auction. The decline in rates accelerated after Fed President Dallas Robert Kaplan he told CNBC that the Fed should start cutting its bond-buying programs in October.

Oil prices have fallen and then recovered after The White House called OPEC and its allies to increase oil production to support a global recovery from the pandemic.

On Tuesday, the Dow and S&P 500 closed at record heights after the Senate passed Infrastructure bill of $ 1 trillion. The law envisions $ 550 billion in new spending for areas including transportation and the electricity grid. The Nasdaq Composite weakened 0.49% on Tuesday, registering its second negative session in the last three.

The march to record stocks comes despite an increase in the number of Covid cases in the U.S. and around the world.

“Widespread vaccine distribution and distancing measures have helped limit the impact of the variant, but we could still see some setback in economic growth as some restrictions are reintroduced and consumers potentially become more cautious,” said Barry Gilbert, LPL asset allocation strategist. Financial. “While we can see an increase in market volatility due to the Delta variant, we believe the S&P 500 is still likely to have more gains by the end of the year.”

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– with a CNBC report by Yun Li.

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