Summary

The major equity indexes chalked up their fifth straight session of gains, led by Apple and other technology stocks as recent inflation worries that sent the market into a sell-off at the start of the month appeared to dissipate.

Apple rose 3.36 percent and contributed more than any other stock to gains on the S&P 500 after Warren Buffett’s Berkshire Hathaway made the iPhone maker its top investment.

Markets were able to shake off economic data for a second consecutive session that indicated inflation pressures were building while weekly jobless claims data on Thursday pointed to a tightening labor market.

The focus instead was on strong quarterly earnings and expectations that more earnings growth is still to come, thanks to newly-implemented corporate and personal tax cuts.

Following many increased earnings forecasts, analysts on average now expect S&P 500 companies to increase their earnings per share in 2018 by 18.9 percent, according to Thomson Reuters I/B/E/S.

Cisco was up 4.73 percent following upbeat results and a strong forecast, as the network gear maker’s years-long efforts to transform into a software-focused company began to pay off.

Meanwhile, bullish sentiment among individual investors hit its highest level since mid-January in the American Association of Individual Investors’ weekly survey.

Energy was the only major S&P 500 sector index to fall, pulled down 0.42 percent by weaker oil prices.

Treasury yields slipped as investors took a breather from selling bonds and readjusted positions to prepare for more inflation-related volatility, a scenario that could take yields even higher.

In the past five sessions, the S&P 500 has gained 5.6 percent, and it remains down 4.9 percent from a Jan 26 record high.

Approximately 7.12 billion shares changed hands on the major domestic equity exchanges, a number that was below the 8.46 billion share average for the past 20 trading days.

Producer Price Index Rises

Producer prices accelerated in January, due in part to strong gains in the cost of gasoline and healthcare, offering more evidence that inflation pressures were building up. The report came on the heels of data on Wednesday showing a broad increase in consumer prices in January.

According to the report by the Labor Department, its producer price index for final demand rose 0.4 percent last month after being unchanged in December. For the 12 months through January, the PPI rose 2.7 percent after advancing 2.6 percent in December.

A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.4 percent last month. The so-called core PPI edged up 0.1 percent in December and was up 2.5 percent for the 12 months through January, the largest increase since August 2014. The core PPI increased 2.3 percent in the 12 months through December.

The PPI report bolsters expectations that inflation will gain steam this year even though its correlation with consumer prices has weakened. A tightening labor market, weak dollar and fiscal stimulus in the form of a $1.5 trillion tax cut package and increased government spending will lift inflation toward the Federal Reserve’s 2 percent target this year.

The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, has undershot its target since May 2012.

Last month, the cost of hospital outpatient care was up one percent, the largest increase since August 2014, after gaining 0.1 percent in December. Hospital inpatient care rose 0.3 percent. Overall, the cost of healthcare services shot up 0.7 percent in January. Those costs feed into the core PCE price index.

Wholesale goods prices increased 0.7 percent last month, after nudging up 0.1 percent in December. Gasoline prices, which rose 7.1 percent, accounted for nearly half of the increase in the cost of goods last month.

Wholesale food prices fell for a second straight month, with prices for prepared poultry posting their biggest drop in 14 years and chicken eggs declining by the most since December 2015. Core goods prices rose 0.2 percent for the second consecutive month.

In a second report, the Labor Department reported that initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 230,000 for the week ended Feb. 10.

Unemployment Claims Fall

Claims for unemployment benefits fell to 216,000 claims in mid-January, which was the lowest level since January 1973. Last week marked the 154th straight week that claims remained below the 300,000 claims threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was much smaller.

The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. The tighter labor market is starting to exert upward pressure on wage growth, which will over time add to inflation pressures.

Last week, the four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose by 3,500 claims to 228,500 claims.

The claims report also indicated that the number of people receiving benefits after an initial week of aid increased by 15,000 to 1.94 million in the week ended Feb. 3. The four-week moving average of the so-called continuing claims fell 5,750 to 1.94 million.