Dow extends record-setting rally; S&P 500, Nasdaq dip as inflation concern weigh



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Dow extends record-setting rally; S&P 500, Nasdaq dip as inflation concern weigh

On Wednesday, a slew of Wall Street stocks had botched to wind down the session in the black as a number of upbeat economic data had ramped up safe-haven bids for a sharply weakening US Dollar amid high-flying US Treasury Yields, while Wall Street ended in red inks, mostly due to a cascade growing concerns over rising inflation alongside a higher interest rate.

In point of fact, US Labour Department said earlier in the day that the US Producer Prices Index had experienced its steepest upsurge in more than a decade last month, rising as much as 1.3 per cent that followed a gain of 0.3 per cent a month earlier, which in effect had stoked frets of a rapid rise in inflation later this year.

Aside from that, January 27-28 FOMC Minutes report revealed earlier in the day had underscored Fed policymakers' concern over a likely rise in inflation later this year, in particular due to a flurry of fiscal stimulus, while President Biden’s $1.9 trillion pandemic stimulus bill in effect would more likely to muscle up inflations further, building a solid case for a higher interest rate despite US Central Bank’s signals that the US Federal Reserve might choose to tolerate a higher inflation in exchange for a revival of job market with millions of Americans making ends meets through state unemployment benefits.

Wall Street falls as inflation concerns mount

Overall, prospects of a higher interest rate, a rapid hike in inflation alongside a stronger American Dollar had weighed on investors’ morale, as a majority of them were found to be ditching out a deluge of riskier assets including mega-cap tech stocks while solidifying their bets on cyclicals, catalysing another record-setting closing high for trade-sensitive Dow.

Nonetheless, an upsurge in crude oil futures had led to a 1.5 per cent gain in S&P 500’s energy sectors, while an upbeat US retail sales data in January had pushed consumer discretionary stocks 0.7 per cent higher.

Citing statistics, in the day’s Wall Street closing bell, trade-sensitive Dow added 0.29 per cent to notch another record-closing high of 31,613.02 and S&P 500 inched lower to 3,931.33, while Nasdaq dipped 0.58 per cent to 13,965.00.

Meanwhile, addressing to a higher inflation pressure alongside frets of a higher interest rate, President of Bronson Meadows Capital Management in Fairfield, Connecticut, Oliver Pursche said, “The market is accurately reflecting the combination of continued low interest rates and a continued accommodative Fed.