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Wall Street Hits Record Highs on Expectation US Inflation Will Not Stay High

Wall Street
Wall Street (GettyImages)

Wall Street’s three key stock indices all hit record highs on Monday on expectations that strong inflationary trends in the United States will not persist, and the economy will have a good landing by the year-end with encouraging jobs growth.

The Dow Jones Industrial Average, the broadest US equity barometer on the New York Stock Exchange, hit a record high of 35,015 before closing at 34,996, up 126 points or 0.4 percent.

The S&P 500 index, which groups the top 500 stocks on the New York Stock Exchange, reached an all-time peak of 4,387 before settling at 4,385, up 15 points or 0.4 percent.

The Nasdaq Composite index, which includes high-flying tech stocks such as Facebook, Amazon, Apple, Microsoft, Netflix and Google, hit a historic high of 14,761 before finishing the day at 14,733, up 31 points or 0.2 percent.

Earlier on Monday, Federal Reserve Bank of Minneapolis Neel Kasjkari said US inflation will subside over time and the job market will likely pick up later in the year despite high price pressures and uneven employment as the economy tries to recover.

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The Personal Consumption Expenditure Index – the Federal Reserve’s preferred gauge for inflation – increased by a multiyear high of 3.4 percent in the 12 months to May when stripped of volatile food and energy prices.

The economy shrank 3.5 percent in 2020, although first quarter data for 2021 showed a dynamic rebound of 6.4 percent. The Federal Reserve has forecast a 6.5 percent growth for all of 2021.