US stocks climbed to record highs, closing at session highs on Friday as Wall Street ended the week in solid gains as optimism increased on the reopening.
The Dow Jones Industrial Average rose 297.03 points to 33,800.60, a record high. The S&P 500 gained 0.8% to 4,128.80, setting its third record in a row. The tech-heavy Nasdaq Composite gained 0.5% to 13,900.19.
Stocks, linked to the recovering economy, re-led gains amid accelerated adoption of vaccines. Carnival Corp was up 2.6% after upgrading Wall Street two times due to pent-up demand and a possible summer restart. General Electric rose more than 1%. JPMorgan added 0.8%.
The blue-chip Dow rose 2% this week while the S&P 500 rose 2.7% and had its best week since early February. The Nasdaq was up 3.1% over the same period as the big tech names outperformed. Apple rose more than 8% this week, while Amazon and Alphabet both gained more than 6%.
On the data front, the producer price index, which measures wholesale price inflation, rose in March. March PPI data showed a 1.0% increase, compared with a projected 0.4% increase among economists polled by Dow Jones.
The PPI was up 4.2% year over year, the largest annual increase in more than nine years.
“Inflation in the pipeline continues to rise,” said Peter Boockvar, chief investment officer of the Bleakley Advisory Group. “We’ll see to what extent companies are passing this on to consumers with CPI next week. From what I’ve heard from companies, this process is only just beginning.”
The yield on 10-year government bonds rose slightly to 1.66% according to the inflation data. Government bond yields had pulled back from their recent highs earlier this week.
Market volatility has decreased significantly as the S&P 500 climbed further to recreate its record high. The Cboe Volatility Index, known as the VIX, traded below the 20 threshold for eight consecutive sessions. The index examines the S&P 500 option prices to determine the extent of fear on Wall Street. The VIX dropped below 17 on Friday.
“Contrary to the headlines, rising interest rates, healthy inflation and a possible rate hike by the Fed are not necessarily market negative,” said Larry Adam, chief investment officer at Raymond James, in a note. “In fact, the annualized performance of the S&P 500 has been above average under any of these dynamics as long as economic growth remains robust – which we believe is possible.”
Investors largely shook off an unexpected surge in unemployment claims on Thursday from last week. The Department of Labor reported that total initial claims for the week ending April 3 totaled 744,000, well above the 694,000 expectation of economists polled by Dow Jones.
Federal Reserve Chairman Jerome Powell described Thursday’s recovery from the pandemic as “uneven,” suggesting a more robust recovery is needed.
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