The S&P 500 index closed at a record Friday, halting Wall Street’s strong rally this week, despite inflation hitting a 39-year high.
The S&P 500 rose 0.95% to 4,712.02 to close at a record. The 500-stock average is 0.7% from its all-time high. The Dow Jones Industrial Average rose 216.30 points, or 0.6%, to 35,970.99. The tech-focused Nasdaq Composite rose 0.7% to 15,630.60.
The Dow Jones Industrial Average is up 4% since Monday, ending a four-week losing streak. The 30-stock index had its best weekly performance since March. The S&P 500 and Nasdaq Composite are up 3.8% and 3.6% this week, respectively, the best since February for both indexes.
Inflation spiked 6.8% year-on-year in November to the highest rate since 1982, the Labor Department said Friday. The print was slightly higher than the Dow Jones estimate of 6.7%. The consumer price index, which measures the cost of a basket of goods, rose 0.8% on the month.
Core CPI, which excludes food and energy prices, rose 0.5% on the month and 4.9% from a year ago, matching estimates.
Some investors may have predicted even hotter inflation than economists, leading to a relief rally after the numbers. DoubleLine’s Jeffrey Gundlach said on a call this week he fears inflation could soon top 7%.
“Friday’s CPI figure may suggest the highest inflation in decades, but it still came in as expected. This is actually a good thing, as the market has already priced in higher inflation. , so this could be seen as a relief,” said Ryan Detrick, director of market strategy at LPL Financial.
Detrick said one bright spot of the CPI report was that the increase in used cars, accommodation and airfares were all lower than expected. These areas are already at a premium and this could be one of the first signs that inflation may be nearing a peak, he added.
Investors are also wary that high inflation could prompt the Federal Reserve to speed up the recall of its $120 billion monthly bond-buying program.
Oracle shares rose 15.6% on Friday, the day after the company posted Quarterly results better than expected.
Airlines offer discounts on Fridays. Southwest Airlines fell nearly 3.8% after another Wall Street drop, this time from Goldman Sachs.
Interactive fitness company Peloton added to its woes, falling about 5.4% after falling 11.3% on Thursday. Credit Suisse cut its stance on the company, saying a return to the gyms and a shift in consumer spending will hurt profits.
