Stocks closed higher on Wall Street Wednesday after the latest report of surging prices appeared to keep the Federal Reserve on track to raise interest rates later this year. The S&P 500 rose 13.28 points, or 0.3%, to 4,726.35. The Dow Jones Industrial Average rose 38.30 points, or 0.1%, to 36,290.32. The Nasdaq rose 34.94 points, or 0.2%, to 15,188.39. Inflation jumped 7% last month, its fastest year-over-year pace in nearly four decades, but in line with economists’ forecasts. Fed Chair Jerome Powell told Congress Tuesday the Fed stands ready to raise rates to fight inflation. The yield on the 10-year Treasury note edged down to 1.73%.
Technology stocks led the market higher. A mix of retailers and other companies that rely on direct consumer spending, such as auto companies, also made solid gains, while health care companies fell. Health care companies fell. Biogen slid 6.7% for the biggest drop in the S&P 500 on news that Medicare is limiting coverage of the biopharmaceutical company’s $28,000-a-year Alzheimer’s drug The central bank is trimming bond purchases that helped keep interest rates low throughout the virus pandemic. Investors are closely watching to see just how soon the Fed will start raising interest rates to fight inflation, the AP reports.
"We're in a period where I don’t think we've ever been before with the amount of stimulus that was put to work," says Greg Marcus, managing director of UBS Private Wealth Management. "You can't have that much of an increase without having inflation ticking up." Wall Street will get another update on rising inflation on Thursday, when the Labor Department releases December results from an index based on US wholesale prices, which shows how inflation is affecting costs for businesses. Wall Street will be closely watching the latest round of earnings to see how companies are dealing with inflation. Several airlines and banks this week will be among the first big companies to report their latest financial results. Delta Air Lines reports its results on Thursday. Citigroup, JPMorgan Chase, and Wells Fargo report results on Friday.
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