The S&P 500 climbed to an all-time high Thursday as investors shook off a major inflation report that showed a greater than expected spike in price pressures.
The broad equity benchmark rose 0.6% to an intraday record of 4,249.74, beating its May 7 high after trading sideways for a month. The Dow Jones Industrial Average rose 275 points while the Nasdaq Composite traded 0.7% higher despite rising bond yields.
May consumer prices accelerated the fastest since summer 2008 amid the economic recovery from the pandemic-triggered recession, the Labor Department reported Thursday.
The consumer price index, which is a basket of food, energy, groceries and prices for a range of goods, increased by 5% compared to the previous year. Economists polled by Dow Jones had expected an increase of 4.7%.
“I think there were a lot of people holding back, who wanted to see the hotter inflation number,” CNBC’s Jim Cramer said on Squawk on the Street. “Now they said, ‘Okay, this is over now. Let’s buy something.’ Because they were on the sidelines and want to get in. I don’t think that’s really common these days because there is still so much purchasing power. People want in. “
Fears of a surge in inflation weighed on the stock market for the last month, with investors worried that the rise in prices will add costs to businesses, spike interest rates, and cause the Federal Reserve to abandon its easy money policy.
“This CPI is unlikely to change the narrative dramatically and there are still signs that inflationary momentum will weaken in the coming months,” Adam Crisafulli, founder of Vital Knowledge, said in a statement Thursday.
Many economists also said the used car cost increase for the month may have skewed the inflation indicator. Used car and truck prices rose more than 7%, accounting for a third of the total increase for the month, according to the Bureau of Labor Statistics. The rise in used car prices likely reflects a temporary phenomenon related to the pandemic and car supply.
A separate report released Thursday showed that unemployment claims for the week ended June 5 were 376,000, up from a Dow Jones estimate of 370,000. The total was still the lowest in the pandemic-era.
UPS stocks rose about 1% after upgrading JPMorgan. The shares of Boeing and Delta Air Lines were also higher.
Video game retailer and meme stock GameStop fell 9% even after the company named former Amazon executive Matt Furlong as its next CEO and said sales rose 25% in the most recent quarter. The company also said it can sell up to 5 million additional shares.
– CNBC’s Hannah Miao contributed to this story.
