Wall Street

Wall Street Extends Gains; Dow, S&P 500 at Record Levels

Wall Street’s indices, the Dow Jones Industrial Average and S&P 500 closed at record levels on Wednesday, as data indicated U.S. inflation growth may have peaked, while sectors tied to economic growth advanced on the heels of the passage of a large infrastructure bill.

The Labor Department said the consumer price index increased 0.5% last month after climbing 0.9% in June, the largest drop in month-to-month inflation in 15 months, easing concerns about the potential for runaway inflation.

“Certainly, the numbers show you more deceleration,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC in New York.

“This number is going to put the Fed in a little bit of a quandary because they’ve gone out with all this rhetoric about tapering, about tightening rates, about being defensive and the inflation numbers aren’t quite where they should be, but they’re certainly not showing that this thing is out of control.”

Wall Street investors have been closely attuned to inflation pressures in recent months, concerned that a continual rise in prices could push the Federal Reserve to begin to scale down its ultra-accommodative policy stance earlier than anticipated.

Kansas City Federal Reserve President Esther George said on Wednesday that with the U.S. economy growing at a robust pace, it signals the “time has come to dial back the settings.” In addition, Dallas Federal Reserve President Robert Kaplan said the central bank should announce its timeline to reduce its massive bondholding next month, with tapering to begin in October.

Wall Street Index Overview

The Dow Jones Industrial Average rose 220.3 points, or 0.62%, to 35,484.97, the S&P 500 gained 10.95 points, or 0.25%, to 4,447.7 and the Nasdaq Composite dropped 22.95 points, or 0.16%, to 14,765.14.

TradingView Chart Snapshot
S&P 500 Index, one year technical performance chart.

After the U.S. Senate passed a $1 trillion bipartisan infrastructure package on Tuesday, an additional $3.5 trillion budget plan full of new domestic programs was also approved by the legislative body but disagreements within the Democratic party threatened the size and scope of the spending.

Shares of equipment maker Caterpillar Inc advanced 3.55% and was the biggest boost to the Dow and peer Deere & Co gained 2.51%. Also moving higher were construction materials supplier Vulcan Materials Co, up 3.24% and steelmaker Nucor Corp, up 3.91% building on gains in the prior session on expectations of benefiting from infrastructure projects.

The materials and industrials were the best performings of the 11 major S&P sectors on wall street.

Technology stocks on wall street moved off earlier lows in the wake of a strong 10-year note auction, which sent yields lower after a five-day streak of gains session amid optimism about a stronger economic reopening.

NortonLifeLock Inc jumped 8.70% after the cybersecurity company agreed to buy London-listed rival Avast for up to $8.6 billion.

Coinbase Global Inc climbed 3.24% on wall street after the cryptocurrency exchange beat market estimates for second-quarter profit, helped by a near 38% jump in trading volumes on a sequential basis.

TradingView Chart Snapshot
Coinbase Global Inc, one year technical performance chart

Virgin Galactic plunged 12.67% after Morgan Stanley downgraded the stock to “underweight” from “equal-weight”, pointing to a prolonged period of no flights.

Advancing issues outnumbered declining ones on the NYSE by a 2.08-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favoured advancers.

The S&P 500 posted 56 new 52-week highs and 1 new low; the Nasdaq Composite recorded 94 new highs and 112 new lows.

Volume on U.S. exchanges was 8.62 billion shares, compared with the 9.55 billion average for the full session over the last 20 trading days.