Dow, S&P 500 Once Again Reach New Record Closing Highs

The major U.S. stock indexes once again moved in opposite directions during trading on Wednesday, closing mixed for the fourth consecutive session. While the Dow and the S&P 500 reached new record closing highs, the tech-heavy Nasdaq finished the day modestly lower.

The Dow climbed 220.30 points or 0.6 percent to 35,484.97 and the S&P 500 rose 10.95 points or 0.3 percent to 4,447.70. Meanwhile, the Nasdaq rebounded from its worst levels of the day but still closed down 22.95 points or 0.2 percent at 14,765.14.

The mixed performance on Wall Street came after the Labor Department’s highly anticipated reading on consumer price inflation was not bad as some had feared.

The Labor Department said its consumer price index climbed by 0.5 percent in July after jumping by 0.9 percent in June.

The increase in consumer prices, which came following the biggest jump in thirteen years in the previous month, matched economist estimates.

Compared to the same month a year ago, consumer prices in July were up by 5.4 percent, unchanged from the annual rate of growth seen in June. The pace of growth was expected to dip to 5.3 percent.

Excluding higher food and energy prices, core consumer prices rose by 0.3 percent in July after surging by 0.9 percent in June. Economists had expected core prices to increase by 0.4 percent.

The annual rate of growth in core prices slowed to 4.3 percent in July from 4.5 percent in June, matching economist estimates.

While the pace of core consumer price growth remains well above the Federal Reserve’s 2 percent target, traders viewed the modest slowdown as a sign the central bank will not be in a hurry to scale back stimulus.

The Fed’s asset purchase program has helped prop up the markets throughout much of the coronavirus pandemic, making traders wary of any signs of potential tapering.

The recent resurgence in coronavirus cases may weigh on the economy, leading the Fed to put off tapering plans and allowing stocks to continue to climb to record highs.

Sector News

Housing stocks moved sharply higher over the course of the session, driving the Philadelphia Housing Sector Index up by 2.7 percent to its best closing level in over two months.

Significant strength was also visible among gold stocks, as reflected by the 2.1 percent jump by the NYSE Arca Gold Bugs Index. The index rebounded after ending Tuesday’s trading at its lowest closing level in well over a year.

The rebound by gold stocks came amid a substantial increase by the price of the precious metal, with gold for December delivery surging up $21.60 to $1,753.30 an ounce.

Transportation stocks also turned in a strong performance on the day, resulting in a 1.8 percent increase by the Dow Jones Transportation Average. The average ended the day at a one-month closing high.

Banking, oil service and chemical stocks also moved notably higher, while a steep drop by biotechnology stocks weighed on the tech-heavy Nasdaq.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index climbed by 0.7 percent, while China’s Shanghai Composite Index inched up by 0.1 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.8 percent, the French CAC 40 Index and the German DAX Index rose by 0.6 percent and 0.4 percent, respectively.

In the bond market, treasuries fluctuated over the course of the session before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.339 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to a pair of Labor Department reports on weekly jobless claims and producer price inflation.

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