U.S. stocks extend rally; Dow smashes through 27,000.
The U.S. stock market traded mixed-to-higher on Thursday, with the Dow and S&P 500 setting new records after President Trump abandoned plans to curb drug rebates.
The Dow Jones Industrial Average (DIA) surged 227.88 points, or 0.9%, to 27,088.08. That was the first time the Dow closed above 27,000.
President Trump’s decision to cancel a proposal that would have eliminated rebates from government drug plans drove UnitedHealth Group Inc. sharply higher. The health care blue-chip rose more than 5%.
The broad S&P 500 Index (NYSEARCA:SPY) gained 0.2% to 2,999.87, a new all-time high.
Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) edged down 0.1% to close at 8,196.04.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) held within a narrow trading range on Thursday, reflecting calm trading conditions on Wall Street. The so-called “fear index” settled up 0.1% at 13.04 on a scale of 1-100 where 20-25 represents the historic average.
In economic data, U.S. underlying inflation rose faster than expected last month, offering compelling evidence that the domestic recovery was still on track. The core consumer price index (CPI), which strips away volatile goods such as food and energy, rose 0.3% from May and 2.1% annually, the Department of Labor reported Thursday. Analysts had called for a monthly gain of 0.2%.
The Labor Department also said that initial jobless claims fell by 13,000 last week to a seasonally adjusted 209,000, the lowest in three months.
The Final Word: Firming inflation will probably not change expectations the Federal Reserve will lower interest rates this month. Fed Fund futures prices imply a 100% likelihood of a rate cut following the July 30-1 Federal Open Market Committee (FOMC) meeting.