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Stocks rose on Friday, with the S&P 500 closing at a fresh record.
The
rose 14 points, or less than 0.1%, while the
rose 0.2% and closed at a new high of 4,247.44 points. The
meanwhile, advanced 0.4%.
Asian markets traded both ways, with
index sliding 0.9%, while Korea’s
climbed 0.8%. The
rose 0.7% and the
gained 0.7%, lifted by stronger shares of heavily weighted resource stocks such as miner
as metals prices rose on Friday.
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A group of 10 Democratic and Republican senators said they have reached an agreement for an infrastructure spending program. It would include $1.2 trillion in spending over the next 8 years and would not be financed with tax hikes. Not only would the plan potentially create jobs and some additional economic growth, but if there are ultimately no corporate tax hikes, corporate earnings would not take a hit.
The market is exhibiting “some mild infrastructure optimism,” writes
Tom Essaye,
founder of Sevens Report Research, but “this compromise is still very unlikely to ever become law.”
While investors have been harboring fears that rising inflation will push central banks to tighten ultra-easy monetary policies put in place to fight the Covid-19 pandemic, the Federal Reserve has been trying to reassure over the data.
The “current indications are that inflationary pressures are likely to subside in the second half of the year and increasingly investors are beginning to warm to the Federal Reserve’s narrative of the current elevated levels being transitory,” said Richard Hunter, head of markets at Interactive Investor, in a note to clients.
The Federal Open Market Committee meets next week, but no change in policy is expected. The European Central Bank on Thursday kept its stimulus running at a high pace, while it also boosted growth and inflation forecasts.
Still, investors are taking less risk now. The major indices have posted at least 9% year-to-date gains already and inflation and action from the Fed are still potential threats. “I get the sense that there’s a pretty strong inclination towards profit taking now,” says Yung Yu Ma, chief investment strategist at BMO Wealth Management.
Among stocks to watch, shares of
(ticker: AMC) closed up 15.4% on Friday. The movie-theater operator on Thursday got a credit rating upgrade from S&P Global Ratings, which said company has a lesser chance of default after taking advantage of the meme-stock rally to raise cash in equity markets.
(BIIB) stock closed down 4.4% despite getting upgraded to Outperform from Market Perform at Alliance Bernstein.
(IP) stock rose 1.3% after getting upgraded to Buy from Hold at Argus.
(STX) stock finished down 0.7% after getting upgraded to Neutral from Negative at Susquehanna.
(VRTX) stock dropped 11% after the company halted development of a drug that would treat a genetic disease.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
