Wall Street gains, S&P hits record closing high as CPI meets
expectations
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[December 11, 2021] By
Stephen Culp
NEW YORK (Reuters) - Wall Street advanced
on Friday and the S&P 500 notched an all-time closing high, as market
participants digested an inflation reading that was in line with
consensus, but also marked the largest annual increase in consumer
prices in nearly four decades.
All three major U.S. stock indexes advanced, with tech shares doing the
heavy lifting.
The indexes all ended the session higher than last Friday's close, and
the benchmark S&P 500 posted its biggest weekly percentage advance since
the week ended Feb. 5, as waning jitters over the Omicron coronavirus
variant helped fuel a broad rally early in the week.
A report from the Labor Department showed consumer prices surged last
month to a 6.8% annual growth rate, the highest reading in more than 39
years.
"It would appear that today’s reaction would indicate the markets were
discounting the (CPI) reading," said Chuck Carlson, chief executive
officer at Horizon Investment Services in Hammond, Indiana. "The markets
are always looking forward and perhaps today's reading is indicative of
a peak versus a sustained level."
![](http://archives.lincolndailynews.com/2021/Dec/11/images/ads/current/sirrennatea_sda_HFH_2021.png)
Persistent inflation due to ongoing supply-chain challenges suggests the
U.S. Federal Reserve could very well start tightening its accommodative
monetary policy sooner than many might have hoped.
"Clearly, it’s being driven primarily by supply-chain issues," Said Tim
Ghriskey, senior portfolio strategist at Inverness Counsel in New York.
"But it appears these issues could be easing, and over time we should
see them moderate. And that should take the foot off the inflation
accelerator."
A Reuters poll of economists sees the central bank hiking key interest
rates from near zero to 0.25-0.50% in the third quarter of next year,
followed by another in the fourth quarter.
The Fed is expected to convene next week for its two-day monetary policy
meeting, which market participants will be scrutinizing for any clues
regarding those rate increases along with the pace at which it will
taper its bond purchases.
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A street sign for Wall Street is seen in the financial district in
New York, U.S., November 8, 2021. REUTERS/Brendan McDermid
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"The Fed is has telegraphed on tightening sooner rather than later," Carlson
added. "The markets are more comfortable with Fed tightening if it reduces
inflation expectations."
The Dow Jones Industrial Average rose 216.3 points, or 0.6%, to 35,970.99, the
S&P 500 gained 44.57 points, or 0.95%, to 4,712.02 and the Nasdaq Composite
added 113.23 points, or 0.73%, to 15,630.60.
All 11 major sectors in the S&P 500 ended the session green, with technology and
consumer staples enjoying the largest percentage jumps.
Shares of software firm Oracle Corp jumped 15.6% after it forecast an upbeat
third-quarter outlook.
Broadcom Inc gained 8.3% following the chipmaker's announcement of a $10 billion
share buyback plan.
Elon Musk, chief executive of Tesla Inc, tweeted that he is "thinking of
quitting my jobs & becoming an influencer full-time." The electric car maker's
stock advanced 1.3%.
Southwest Airlines dropped 3.8% after Goldman Sachs downgraded the commercial
air carrier's shares to "sell" from "neutral."
Declining issues outnumbered advancing ones on the NYSE by a 1.05-to-1 ratio; on
Nasdaq, a 1.48-to-1 ratio favored decliners.
The S&P 500 posted 38 new 52-week highs and one new low; the Nasdaq Composite
recorded 34 new highs and 155 new lows.
Volume on U.S. exchanges was 9.60 billion shares, compared with the 11.42
billion average over the last 20 trading days.
(Reporting by Stephen Culp in New York; Additional reporting by Devik Jain,
Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru; Editing by Matthew
Lewis)
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