Wall Street’s main indexes ended little changed on Tuesday, with gains in energy and financial shares countering declines in healthcare, as investors weighed the latest U.S. economic data for signs of a rebound and rising inflation.
The S&P 500 financial sector hit a record high, while expected growth in fuel demand boosted oil prices and helped lift the energy sector. The healthcare sector was dragged down by a weak profit forecast from Abbott Laboratories.
Data showed U.S. manufacturing activity picked up in May as pent-up demand in a reopening economy boosted orders. But unfinished work piled up because of shortages of raw materials and labor.
“People came back from a holiday weekend convinced that the economy is recovering nicely and that any inflation that we might be seeing in labor and other costs is temporary,” Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
Unofficially, the Dow Jones Industrial Average (.DJI) rose 40.14 points, or 0.12%, to 34,569.59, the S&P 500 (.SPX) lost 2.97 points, or 0.07%, to 4,201.14 and the Nasdaq Composite (.IXIC) dropped 16.31 points, or 0.12%, to 13,732.43.
Along with financials and energy, the small-cap Russell 2000 (.RUT) rose sharply on Tuesday, underscoring strength for segments of the stock market expected to do particularly well in an expanding economy.
“The economy certainly is growing and that’s a positive, and again it’s a positive for the most cyclical parts of the stock market,” said Kristina Hooper, chief global market strategist at Invesco in New York.
While the S&P 500 remains within about 1% of its record high after four straight months of gains, investors are worried about whether rising inflation could hit equity prices.
Stock markets on Friday brushed off a surge in key inflation readings for April following reassurances from Federal Reserve officials that the central bank’s ultra-loose monetary policy would remain in place.
Minneapolis Federal Reserve Bank President Neel Kashkari and Fed Vice Chair for supervision Randal Quarles on Tuesday reiterated the view that higher prices would be transitory.
This week’s focus will be on a raft of economic data, culminating with U.S. payrolls due on Friday.
Cloudera Inc (CLDR.N) shares jumped after private equity firms KKR & Co (KKR.N) and Clayton Dubilier & Rice LLC agreed to take the data analytics firm private.
A group of “meme stocks” extended gains from the previous week, with shares of AMC Entertainment Holdings Inc (AMC.N) rising after the movie theater chain said it sold $230 million of its stock.