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Save climber, on track for new records

U.S. stocks rose Friday, pointing to the S&P 500 breaking a new record after three straight weeks of gains.

The S&P 500 rose 0.1% a day after the market benchmark closed at a record high. The Dow Jones Industrial Average rose 0.3% and the Nasdaq Composite rose 0.1%.

The major indices are hovering close to record highs, leaving investors looking for any catalysts that could propel the next leg in what has been a sharp rally since the March 2020 route. Fresh spending plans from the Biden administration that could result in higher taxes, as well as the high valuation of stocks and the emergence of new Covid-19 variants make people more cautious. Money managers are also considering whether the rise in inflation is likely to be temporary.

“We are still positive about the outlook, but we are not as optimistic as three months ago,”

; said Daniel Morris, chief marketing strategist at BNP Paribas Asset Management. “The market needs to take a breather and let earnings catch up where prices are.”

Some meme stocks traded strongly by individual investors rose. AMC Entertainment Holdings and GameStop totaled more than 4%.

In the bond markets, the yield on the 10-year government note tipped up to 1.459% from 1.458% on Thursday, the lowest since March 2. Interest rates rise when prices fall. Interest rates had been pulled down for three straight days by weak economic data and strong demand from investors both in the US and elsewhere.

The Department of Labor said Thursday that the U.S. economic recovery is driving the biggest rise in inflation in nearly 13 years, with consumer prices rising 5% in May from a year ago. Investors have been worried for some weeks that a sharp and sustained rise in inflation could cause the Fed to weigh the end of its light monetary policies in the coming quarters. Recently, market inflation expectations have declined, but it remains a focal point for many people.

“Inflation is clearly the big risk out there,” said Edward Park, chief investment officer at British investment firm Brooks Macdonald. “Some of the teeth have been softened over the last 24 hours, but there is still a risk that the Fed will come out and say that this may be more persistent, and that changes the narrative, so central banks are still a lot to look at. ”

Investors will get new data indicating whether Americans’ prospects for the economy have improved when the University of Michigan’s preliminary index of consumer sentiment for this month is released at. 10 ET.

Overseas, the continental Stoxx Europe 600 rose 0.7% after closing Thursday at a record high.

The largest stock indices in Asia closed on a mixed note. Shanghai Composite Index fell 0.6%. South Korea’s Kospi index rose 0.8%, while Hong Kong’s Hang Seng index added nearly 0.4%.

Major stock indices have been moving in a narrow range in recent weeks.


carlo allegri / Reuters

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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