US stocks rise as runaway inflation fears ease

Stocks on Wall Street rose as fears of runaway inflation abated to help send the Dow Jones Industrial Average higher for a sixth consecutive session.

The Dow rose nearly 200 points to near its longest winning streak since February as investors got another sign that inflation may be rising.

But new US Labor Department data indicated the increase was not so rapid that the US Federal Reserve will have to take aggressive actions to keep the economy from overheating.

However, economists polled by the Wall Street Journal believe the economy will run out of steam in the next two years as interest rates rise.

Some 59% of private-sector economists in the survey say the second-longest economic boom in American history will most likely end in 2020.

An additional 22% opt for 2021, while smaller camps predict the next recession will arrive next year, in 2022 or at some unspecified later date.

“The current economic expansion is getting long in the tooth by historical standards, and more late-cycle signs are emerging,” Scott Anderson, chief economist at Bank of the West, said.

Prices rise 0.2%
The US consumer-price index rose 0.2% in April, while average hourly pay for private-sector workers was flat and average weekly earnings fell 0.1%, taking inflation into account.

On Wall Street, the Dow industrials added 196.99 points, or 0.8%, to 24,739.53. The S&P 500 rose 0.9% to 2723.07, while the Nasdaq Composite also added 0.9% to 7404.97.

Shares of Apple extended their climb, adding another 1.2% points to help lift the Dow higher.

Apple has added 15% so far this month. Facebook and Google parent Alphabet have risen about 8%.

United Health Group, another Dow stock, also traded higher, gaining 1.8%.

“We’re settling in a little bit as the leadership in the market has improved,” Mark Lehmann, president of JMP Securities, said.

Apple’s massive gain since it reported strong earnings and disclosed plans to buy back an extra $US100 billion in shares has given some investors “real optimism about the future,” he said.

Oil prices unchanged
Oil prices were steady despite uncertainty remaining over the extent to which the renewed sanctions will curb Iran’s oil exports. 

Light, sweet crude for June delivery traded near flat at $US71.14 a barrel in New York, one day after hitting its highest level since 2014.

Brent, the global benchmark, also traded unchanged at $US77.20 a barrel.

Meanwhile, the weak consumer pricing data put pressure on the dollar and US government bond yields.

The 10-year Treasury bond yields fell to 2.970% from 3.004% on Wednesday. The WSJ Dollar Index slipped 0.5%. The euro was up 0.6% against the US dollar at $1.1927.

“Inflation currently is one of the most important measures to keep an eye on. This will determine how financial markets will continue moving forward,” Lukas Daalder, chief investment officer for Robeco’s Investment Solutions, said.

The Stoxx Europe 600 fell 0.1% after the Bank of England cut its growth forecast for this year to 1.4% from 1.8% but stuck with its estimates for the second quarter and subsequent years.

France’s CAC 40 rose 0.2%, Germany’s Dax advanced 0.6% and the UK’s FTSE 100 was up 0.5%.

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