Stocks advance as investors weigh on growth and inflation
Damian J. Troise
US stocks edged higher on Wednesday as investors continued to monitor the economic recovery and rising inflation.
The S&P 500 was up 0.2% at 11:38 a.m. EST. The 125-year-old Dow Jones Industrial Average rose 38 points, or 0.1%, to 34,349. The Nasdaq rose 0.5%.
Various companies that rely on direct consumer spending have made solid gains. Dick’s Sporting Goods jumped 16.7% after reporting higher first-quarter sales and strong profits with the return of team sports. Urban Outfitters grew 14.5% and Abercrombie & Fitch 14.8% on similarly strong financial results. These businesses, along with hotels and cruise lines, are poised to grow as more people return to semblance of normalcy with increased vaccinations and a decline in the pandemic.
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Gains at retailers and communications firms were restrained by the lag in shares of tech and healthcare companies.
Markets have been bumpy over the past few days as investors move past a bumper corporate earnings season and wait for further clues to economic growth.
“This will just be the state of the market environment for some time to come,” said Kristina Hooper, chief global market strategist at Invesco.
The next key economic update is scheduled for Thursday, when the Commerce Department releases its latest GDP report for the first quarter. Economists expect a huge rebound in 2021, and early-year results will give Wall Street a clearer picture of the future.
Economic growth has also raised concerns about inflation, although analysts expect much of the increase to be linked to economic growth and to be digestible. Much of the concern centers on higher inflation, prompting governments and central banks to reverse economic stimulus and change course on interest rates. Federal Reserve officials said they did not see the need to change course yet.
Bond yields have remained relatively stable. The 10-year Treasury yield held steady at 1.56% as of Tuesday night.
“Investors need to stop worrying about short-term concerns about the Fed and inflation,” Hooper said. “It really creates a lot of the churn that we’re seeing.”
Online retail giant Amazon is buying MGM, the film and television studio behind James Bond, “Legally Blonde” and “Shark Tank,” in a bid to fill its video streaming service with more shows to watch. The announcement left the stock little changed.
European markets were mixed. The FTSE 100 in London fell 0.1%, while the German Dax fell 0.1% and the French CAC 40 rose 0.1%. The markets in Asia were generally higher.