NEW YORK -- Investors saw some new hints that inflation is increasing on Wednesday, but they still sent shares of banks, technology firms, and consumer-focused companies climbing. That was a big change after the market's inflation-inspired plunge earlier this month.
After a shaky start, stocks rose for the fourth-straight trading day, and banks made some of the largest gains as bond yields reached new four-year highs. The move in yields came after the government said consumer prices climbed in January at a slightly faster pace than economists had expected. A different government report showed retail sales were unchanged in December and slipped last month.
The Standard & Poor's 500 index rose 35.69 points, or 1.3 percent, to 2,698.63. The Dow Jones industrial average increased 253.04 points, or 1 percent, to 24,893.49. The Nasdaq composite climbed 130.10 points, or 1.9 percent, to 7,143.62. The Russell 2000 index of smaller-company stocks rose 27.15 points, or 1.8 percent, to 1,522.10.
After a 10 percent plunge in just nine days, the S&P 500 has risen 4.5 percent in the past four trading days.
"I think the fears of the economy overheating have been a little bit balanced out with the combination of these two numbers," said Katie Nixon, chief investment officer for Northern Trust Wealth Management, regarding the reports on prices and retail sales. "The bond market is not suggesting that runaway inflation is a deep concern."
Stocks began plunging Feb. 1 after the Labor Department said wages grew at a rapid clip in January. Investors worried that that meant inflation was rising and that it would push the Federal Reserve to start raising interest rates more quickly, making it more expensive for people and businesses to borrow money. That would slow down economic growth as well as growth in corporate profits. Nixon said that Wednesday's reports show inflation probably isn't rising that fast.
The Labor Department said prices paid by consumers rose 0.3 percent in January, excluding volatile items like food and energy. That's the most in a year, and it sent bond yields and gold prices higher.
The yield on the 10-year Treasury note rose to 2.91 percent, its highest mark in four years, from 2.84 percent a day earlier. That helped banks, as the higher interest rates make lending more profitable. But it hurt high-dividend companies like utility and phone companies. Those stocks are often compared to bonds because of their big dividend payments and relatively steady prices, but investors find them less appealing when bond yields are rising.
Retailers traded higher despite the tepid numbers in the report. Amazon shares rose $36.54, or 2.6 percent, to a record high of $1,451.05, and Tiffany shares rose $2.15, or 2.1 percent, to $103.11. Nike climbed $2.09, or 3.2 percent, to $67.96.
Gold jumped $27.60, or 2.1 percent, to $1,358 an ounce. Silver rose 35 cents, or 2.1 percent, to $16.88 an ounce. Copper rose 7 cents, or 2.3 percent, to $3.24 a pound.
U.S. crude rose $1.41, or 2.4 percent, to $60.60 a barrel in New York. Brent crude, used to price international oils, rose $1.64, or 2.6 percent, to $64.36 a barrel in London.
Business on 02/15/2018