Dow rises slightly, S&P 500 adds to a record as tech shares gain
11 Jun 2021
U.S. stocks rose on Friday with the S&P 500 adding to its new record, as Wall Street aims to wrap up the week on a high note.
The Dow Jones Industrial Average gained 60 points while S&P 500 added 0.2% after closing at a record in the previous session. The Nasdaq Composite advanced 0.2% with Apple, Amazon, Microsoft and Netflix all trading in the green.
The market built on Thursday’s gain as investors shrugged off a report showing inflation rising at its fastest pace since 2008. The Consumer Price Index jumped 5% in May from a year earlier, at a slightly higher pace than expected.
“While the May CPI report came in above estimates, the market was not too surprised and digested the data as transitory for now,” said Craig Johnson, technical market strategist at Piper Sandler. “The Treasury market appeared to be in agreement with the temporary inflation outlook.”
Perhaps giving a boost to stocks has been the reaction in the bond market to the hot inflation reports. The 10-year Treasury yield fell to a three-month low of 1.44% on Friday, after trading above 1.77% earlier in the year.
Tech companies tend to underperform in a rising-rate environment as higher rates lower the present value of expected cash flow for growth-oriented companies. The tech-heavy Nasdaq has been the relative loser in 2021 among the major averages as bond yields turned higher.
For the week, the major benchmarks are mixed. The Dow is off by 0.8%, but the S&P 500 is up 0.2%, on pace for its third straight positive week. The Nasdaq Composite is the outperformer this week with a 1.6% gain so far, poised to post its fourth winning week in a row.
Some of the meme stocks were rebounding after a rough day on Thursday. AMC shares were up 3% and GameStop gained 4%. Those two suffered double-digit percent losses on Thursday as momentum in the Reddit favorites faded.
“The ups and downs of meme stocks have generally had little impact on the overall direction of the stock market,” Peter Berezin, BCA Research’s chief global strategist, said in a note. “Nevertheless, growing interest in meme stocks is positive for equities over a medium-term horizon… This is because the meme stock phenomenon is drawing funds into the stock market, boosting prices and liquidity in the process.”