The S&P 500 set an intraday record high on Monday, adding again to the view that the decade-long bull market has further to run, after consumer spending rose in March and inflation data was benign.

The benchmark index exceeded its intraday record of 2,940 reached on September 21, rising to a session high of 2,949. The S&P 500 is now up more than 17 percent for the year. The index along with the Nasdaq posted another record close as well on Monday.

Hopes of a resolution of the U.S.-China trade war, upbeat earnings and a dovish Federal Reserve have powered the rally in stocks this year, and even though the Monday’s gains were small, new highs encourage further buying.

A Commerce Department report showed U.S. consumer spending increased by the most in more than 9-1/2 years in March, but a key inflation measure posted its smallest annual gain in 14 months.

Tame inflation supports the Fed’s recent decision to suspend further interest rate increases this year.

As trade talks enter their last leg, U.S. negotiators head to China on Tuesday to try to hammer out details to end the protracted tariff spat between the two countries.

The Fed starts a two-day meeting on Tuesday, at the end of which a decision on interest rates will be announced.

Another busy week of earnings is expected. After the bell, shares of Google parent Alphabet Inc were down 7.2 percent after it reported revenue below Wall Street targets. Alphabet shares ended the regular session up 1.5 percent at $1,296.20.

Apple Inc is due to report on Tuesday.

The consensus is for earnings of S&P 500 companies to have fallen just 0.2 percent in the first quarter, a sharp improvement from a 2 percent decline estimated at the beginning of the month, according to IBES data from Refinitiv data.

Ingersoll-Rand shares jumped 6.5 percent after the Wall Street Journal reported Gardner Denver Holdings Inc is nearing a deal to acquire a unit of the air conditioner maker.

Approximately 5.81 billion shares changed hands on the major domestic equity exchanges, as compared to the 6.56 billion share average over the past 20 trading days.

Substantial Improvement in Consumer Spending

Consumer spending increased by the most in more than 9-1/2 years in March as households stepped up purchases of motor vehicles. At the same time, price pressures remained tame, supporting the Fed’s recent decision to suspend further interest rate increases this year. And the data further allayed concerns about the economy’s health.

The sharp rise in consumer spending reported by the Commerce Department on Monday sets a stronger base for growth in consumption heading into the second quarter after it slowed sharply in the first three months of the year.

Fed officials are scheduled to meet on Tuesday and Wednesday to assess the economy and deliberate on the future course of monetary policy. The Fed in March dropped forecasts for any interest rate increases this year, halting a three-year policy tightening campaign. 

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.9 percent. That was the largest increase since August 2009 and was also driven by increased healthcare expenditures. Spending rose 0.1 percent in February.

Data for January was revised up to show consumer spending rising 0.3 percent instead of the previously reported 0.1 percent gain. The release of the February spending data was delayed by a five-week partial shutdown of the federal government that ended on Jan. 25. 

When adjusted for inflation, consumer spending increased 0.7 percent in March. This so-called real consumer spending was unchanged in February. The data was included in last Friday’s first-quarter gross domestic product report.

March’s surge in real consumer spending suggested an acceleration in consumption was likely in the second quarter. Consumer spending increased at a 1.2 percent annualized rate in the first quarter, the slowest in a year. The overall economy grew at a 3.2 percent rate last quarter.

Spending on goods in March rebounded 1.7 percent, with outlays on long-lasting manufactured goods such as cars shooting up 2.3 percent. Spending on goods fell 0.5 percent in February. Outlays on services increased 0.5 percent last month, driven by healthcare spending, after rising 0.4 percent in February.

With personal income ticking up 0.1 percent in March after rising 0.2 percent in February, there are concerns that the current pace of consumer spending might be unsustainable. Incomes have been almost flat since surging last December.

But a strong labor market is seen as underpinning spending. Wages rose 0.4 percent in March after advancing 0.3 percent in the prior month. However, savings fell to $1.03 trillion in March from $1.16 trillion in February.

Inflation Below Fed Target

The Fed’s preferred measure of inflation, the core personal consumption expenditures price index (PCE), which excluds the volatile food and energy components, was unchanged in March after edging up 0.1 percent in February. 

As a result, the year-on-year increase in the so-called core PCE price index to 1.6 percent, the smallest increase since January 2018, from 1.7 percent in February. 

The core PCE hit the central bank’s 2 percent inflation target in March last year for the first time since April 2012.