Markets: The S&P 500 ended at a record high as the European Central Bank held firm on monetary policy

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Wall Street.
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NEW YORK: The S&P 500 rose to a new record on Thursday as investors shrugged off data showing rising inflation in the US, while European stocks fell after the European Central Bank (ECB) held steady on monetary policy.

All eyes were on the US consumer price reading for May, which showed inflation accelerating to five percent in the twelve months to May, the highest annual reading in 13 years.

Investors have been worried about US inflation for weeks, but they took Thursday’s reading a big step. All three major indices rose, and the S&P 500 closed at an all-time high.

“It’s another case where we had another huge inflation report and nobody cared,” LBBW’s Karl Hailing told AFP. “The market looked the other way.”

The increase was largely driven by higher energy and used car prices, which analysts attributed to separate but temporary factors.

Art Hogan, chief market strategist at National Securities, noted that while the annualized CPI beat expectations, monthly gains slowed to 0.6 percent in May from 0.8 percent in April, largely confirming the Fed’s position that higher inflation would be . transient.

“We may be approaching the peak and it will start to slow down in the June-July time frame,” Hogan said.

Earlier, euro zone shares fell after the European Central Bank, as expected, kept interest rates steady and said it was too early to cut economic stimulus measures.

European Central Bank President Christine Lagarde said it would be “too early and too early” to discuss monetary policy tightening, saying continued support is needed to bolster the recovery.

She told reporters that keeping the taps of cheap money open throughout the pandemic crisis “remains essential to reduce uncertainty and boost confidence.”

Rabobank analyst Jane Foley said the ECB remains highly pessimistic despite an improving economic outlook.

By forgoing the use of thin summer trading conditions to cut stimulus bond purchases, Foley said, “she clearly wanted to give a ‘steady as you go’ message.”

Traders are also tracking the start of the G7 summit, before which the US said it would buy 500 million doses of the COVID-19 vaccine for distribution to poor countries.

Relations between Beijing and Washington have also been in focus, after US President Joe Biden’s decision to rescind his predecessor Donald Trump’s executive order against Chinese-owned mobile apps TikTok and WeChat.

It comes as trade officials from the world’s two largest economies hold discussions about trade and investment links.

More to track …
Bulletin Observer Business News

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