Wall Street rose sharply on Thursday, and Apple inched closer to a $1 trillion stock market value, as tepid inflation data eased worries of faster interest rate hikes this year. The market rallied broadly, with all 11 major S&P sectors posting gains.
Fueled by a $100 billion buyback plan unveiled last week, Apple rose 1.43 percent to a record high close of $190.04, lifting the S&P 500 more than any other stock. The iPhone maker is about 7 percent away from becoming the first company ever to have a market capitalization of $1 trillion.
The consumer price index increased 0.2 percent in April, as rising costs for gasoline and rental accommodation were tempered by a moderation in healthcare prices.
The core CPI, which excludes food and energy components, edged up 0.1 percent in April, slower than the previous two months, and did little to alter traders’ expectations of a June rate hike.
A higher inflation number could have increased fears of more aggressive interest rate hikes by the Fed.
With investors setting aside concerns about a trade war with China, the S&P 500 has risen 3.55 percent in the past week, its strongest five-session showing since February. The S&P 500 reclaimed its 100-day moving average for the first time since April 19, suggesting to some traders that the market may move higher.
CenturyLink gained 7.54 percent after its first-quarter report. That helped the telecoms sector jump 1.9 percent, more than any other sector.
AXA Equitable Holdings, the U.S. division of French insurer AXA, rose 1.7 percent in its market debut. Although its offering raised less than targeted, it was still the largest domestic IPO this year.
The top losers on the S&P 500 included Victoria’s Secret owner L Brands, which fell 7.15 percent, and Booking Holdings, formerly called Priceline, which fell 4.74 percent. Both companies gave disappointing outlooks.
Approximately 6.7 billion shares changed hands on the major domestic equity exchanges, as compared to the 6.6 billion-share average over the past 20 trading days.
CPI Sees Modest Increase
Consumer prices increased modestly during April, pointing to steadily rising inflation that will likely keep the Federal Reserve on a path of gradual monetary policy tightening. At the same time, price pressures could soon feel the effects of a tightening labor market.
Inflation is flirting with the Fed’s two percent target. Fed policymakers have in recent days signaled they would not be too concerned if inflation overshot the target, reiterating what the central bank said in its latest policy statement last week.
The Labor Department said its Consumer Price Index rose 0.2 percent as increases in the cost of gasoline and rental accommodation were tempered by a moderation in healthcare prices. The CPI had slipped 0.1 percent in March.
In the 12 months through April, the CPI increased 2.5 percent, the largest gain since February 2017, after rising 2.4 percent in the comparable period in March.
Excluding the volatile food and energy components, the CPI edged up 0.1 percent after two straight monthly increases of 0.2 percent. It rose 2.1 percent year-on-year in April, matching March’s increase.
The personal consumption expenditures price index excluding food and energy, which is the Fed’s preferred inflation measure, accelerated 1.9 percent year-on-year in March as last year’s big declines in the price of cell phone service plans dropped out of the calculation.
In their policy statement last week, Fed officials said they expected annual inflation to run close to the “symmetric” 2 percent target over the medium term.
Gasoline prices rebounded 3.0 percent after tumbling 4.9 percent in March. Further increases are likely after crude oil prices jumped to 3-1/2-year highs on Wednesday in the wake of President Donald Trump’s decision on Tuesday to pull the United States out of an international nuclear deal with Iran.
Food prices rose 0.3 percent last month, the largest increase in a year, after nudging up 0.1 percent in March. Food consumed at home increased 0.3 percent, the largest rise since March 2017.
Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 percent last month after a similar gain in March.
However, healthcare costs were up only 0.1 percent after advancing 0.4 percent in March, helping to restrain the increase in the core CPI. Prices for used cars and trucks tumbled 1.6 percent in April, the largest drop since March 2009.
The cost of recreation fell 0.4 percent last month, the biggest decline since December 2009. There were also decreases in the cost of airline tickets, new motor vehicles and communications. The cost of motor vehicle insurance fell for the first time in a year.
Apparel prices rose 0.3 percent in April after falling 0.6 percent in the prior month. Prices for household furniture increased 0.5 percent last month, the largest rise since April 2015.
Unemployment Claims Unchanged
the Labor Department reported on Thursday morning that initial claims for state unemployment benefits were unchanged at a seasonally adjusted level if 211,000 for the week ended May 5, with new applications for unemployment benefits holding near more than a 48-year low last week.
Claims fell by 209,000 claims during the week ended April 21, which was the lowest level since December 1969.
The labor market is near or at full employment, leading to a slowdown in job growth as corporations try to hire skilled workers. A government report last Tuesday indicated job openings rising to a record 6.6 million in March.
Competition for workers is expected to push up wage growth, which has remained moderate.
Hiring slowed in March and April after surging in February. The unemployment rate dropped to near a 17-1/2-year low of 3.9 percent in April from 4.1 percent in March. The jobless rate is within striking distance of the Fed’s forecast of 3.8 percent by the end of this year.