Investors continued to sweep away those inflation worries at the start of the week, sending the S&P 500 SPX, +0.18% and the Nasdaq Composite COMP, +0.74% to fresh highs. That’s a decent feat for the latter, which last hit a record on April 26.
“Surprisingly, we find investors more bearish as inflation readings and declining yields dominate conversations,” he said in a note to clients that published on Monday. “Despite these issues, we remain comfortable with our 4600 [S&P 500 SPX, +0.18% ] year-end price target, which implies 8.3% upside.”Inflation readings such as last week’s on consumer prices and higher commodity prices could begin putting profit margins under pressure.
Signs of declining bond yields in the face of higher prices could mean stagflation is looming. That is unlikely, with inflation largely seen as transitory and 10-year Treasury yield rate declines modest , said Golub. While fiscal and monetary policy kept economies running throughout the COVID-19 pandemic, further help looks unlikely. “While further stimulus appears less likely , we are less concerned given an overheating economy; less immediate impact of plan; and higher accompanying taxes,” said Golub.Stock futures YM00, +0.04% ES00, +0.12% NQ00, +0.16% are pointing to slight gains at the open, with a chance indexes could extend those records. European stocks SXXP, +0.
A 17-year trade spat between the U.S. and the European Union over aircraft subsidies for rival manufacturers Boeing BA, -0.87% and Airbus AIR, +0.48% is reportedly close to being resolved. Shares of both are up.
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