US stocks closed out Wednesday’s session with modest gains as recent comments from Federal Reserve officials helped tamp down concerns about runaway inflation and kept bond yields in check.
The Dow Jones Industrial Average rose 10.59 points or 0.03% to 34,323.05, the S&P 500 gained 7.86 points or 0.19% to 4,195.99 and the Nasdaq Composite added 80.82 points or 0.59% to 13,738.00.
Stocks such as Tesla and Alphabet which have struggled in recent weeks as bond yields advanced due to rising inflation worries were among the top boosts to the benchmark S&P 500 index with the 10-year US Treasury note holding below the 1.6% level.
On Wednesday, Fed vice chair for supervision Randal Quarles said he was prepared to open talks on reducing the central bank’s emergency support measures, only to also stress the need to remain patient.
Multiple Fed officials have commented in recent days on inflation, maintaining the central bank views it as transitory and has the tools to clamp down if it begins to run too hot. However, they have also edged closer to starting the debate about tapering or reducing its massive fiscal stimulus plan.
“It feels like everybody is giving a very slow but choreographed message that things are improving, we can at least start talking about talking about tightening,” said Andrew Mies, chief investment officer at 6 Meridian in Wichita, Kansas.
“It could be that the wrong Fed governor says the wrong thing in the next couple of weeks and that kicks it off.”
After fears of rising inflation sparked volatility in equity markets in recent weeks, all eyes will be on the closely watched monthly US personal consumption report, the Fed’s favourite inflation gauge, due later in the week.
With the S&P 500 sitting less than 1% away from its record high, strategists expect the benchmark index to end the year only about 2.5% above its current level as concerns over increasing inflationary risks weigh, according to a Reuters poll.
Analysts have pointed to the 4,200 level on the S&P 500 as a strong resistance point after several failed attempts to hold above which could spark more gains should the index manage to convincingly cross.
Trading volumes are likely to lessen heading into the extended Memorial Day holiday weekend, which could exacerbate price moves.
Advancing issues outnumbered declining ones on the NYSE by a 2.11-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favoured advancers.
The S&P 500 posted 18 new 52-week highs and no new lows; the Nasdaq Composite recorded 62 new highs and 40 new lows.
Volume on US exchanges was 9.83 billion shares compared with the 10.43 billion average for the full session over the last 20 trading days. – May 27, 2021
