U.S. stocks climb to new highs

Stocks rallied to more record highs on Wall Street as a suite of stellar data suggested the recovery for the economy and corporate profits is accelerating.

The S&P 500 rose 1.1% Thursday and the Dow Jones Industrial Average added 0.9%, both reaching all-time highs.

Expectations are very high on Wall Street that the economy is in the midst of exploding out of the cavern created by the pandemic. New reports only bolstered those expectations, including ones showing how hungry Americans are to spend again, how fewer workers are losing their jobs and how much fatter corporate profits are getting.

With growth expectations so high, some investors are worried about the possibility that inflation could swing upward and stay high. If it were to sustain itself, high inflation could send bond prices tumbling, hurt corporate profit margins and trigger volatility across markets worldwide.

The bond market remained notably calm following Thursday morning’s stronger-thanexpected reports, and longerterm yields actually fell to the surprise of some analysts. The yield on the 10-year Treasury dropped to 1.54% from 1.63% late Wednesday. Earlier this month, it had gotten as high as 1.75%.

It’s reminiscent of what happened earlier this week, when a report on the Consumer Price Index came in higher than expected. It would have made sense if the worse-than-expected inflation report had caused investors to sell bonds and send yields higher, but they largely shrugged it off.

Analysts still expect bond yields to tick higher as the year goes on and the economy continues recovering, along with investors shifting money into sectors that will see a greater benefit from the recovery.

“When you’re thinking about GDP growth, it’s really hard to see why the 10-year shouldn’t be higher,” Samana said.