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US STOCKS-S&P 500 closes at record high as long-term inflation fears abate

Credit: REUTERS/BRENDAN MCDERMID

Wall Street stocks ended firmer on Thursday, with the S&P 500 hitting a record closing high, as economic data appeared to support the Federal Reserve's assertion that the current wave of heightened inflation will be temporary.

By Stephen Culp

June 10 (Reuters) - Wall Street stocks ended firmer on Thursday, with the S&P 500 .SPX hitting a record closing high, as economic data appeared to support the Federal Reserve's assertion that the current wave of heightened inflation will be temporary.

All three major U.S. stock indexes advanced, with market-leading megacap stocks putting the Nasdaq .IXIC out front. But economically sensitive transports .DJT and smallcaps .RUT ended the session in negative territory.

The Labor Department's consumer price index (CPI) data came in above consensus and added fodder to the debate over whether current price spikes could morph into long-term inflation, despite the Fed's assurances to the contrary.

But a closer look showed that much of the price surge came from items such as commodities and airfares, and is therefore likely to be temporary.

"Earlier this week we had extremely boring market days as we all had our eyes on the bullseye of this CPI report," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. "But once people looked under the surface, the majority of the higher inflation is due to the reopening, and stocks had a relief rally."

"The market is taking it in stride as it realizes the whole economy isn't overheating," Detrick added.

A U.S. House of Representatives committee passed a $547 billion infrastructure spending bill targeting surface transportation, adopting some of President Joe Biden's proposals as part of his broader $2.3 trillion infrastructure package.

Still, industrials .SPLRCI and transports, sectors that stand to benefit from infrastructure spending, were in negative territory.

Unofficially, the Dow Jones Industrial Average .DJI rose 12.21 points, or 0.04%, to 34,459.35, the S&P 500 .SPX gained 19.71 points, or 0.47%, to 4,239.26 and the Nasdaq Composite .IXIC added 106.86 points, or 0.77%, to 14,018.61.

Among the 11 major sectors of the S&P 500, healthcare .SPXHC enjoyed the largest percentage gains.

But the interest rate-sensitive financial sector .SPSY was the biggest loser, weighed by easing U.S. Treasury yields.

GameStop Corp GME.N, the stock most closely associated with the social media-driven "meme stock" phenomenon, slid after the videogame retailer said it may sell new shares.

Other stocks that have benefited from the retail short-squeeze rally, including Clover Health Investments Corp CLOV.O, AMC Entertainment Holdings AMC.N, Bed Bath & Beyond Inc BBBY.K and GEO Group GEO.N, also ended the session lower.

Boeing Co BA.Ngained after sources told Reuters that United Airlines UAL.O was in talks to place a multi-billion-dollar order for single-aisle jets potentially split between Boeing and Europe's Airbus AIR.PA.

Pfizer Inc PFE.Nrose on news that the United States would pay the drugmaker about $3.5 billion for 500 million COVID-19 vaccine doses that it intends to donate to the 100 lowest income countries.

(Reporting by Stephen Culp; Additional reporting by Ambar Warrick; Editing by Richard Chang)

((stephen.culp@thomsonreuters.com; 646-223-6076;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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