Inflation concerns tempered by data showing US retail sales fell 0.3 per cent last month boosting investor confidence as most tech stocks gain
Facebook and Apple drive market surge in US
Wall Street surged on Wednesday as investors shrugged off stronger than expected inflation data and snapped up shares of Facebook, Amazon and Apple.
The fourth straight day of gains in the S&P 500 saw a return to the "fear of missing out" mentality that accompanied Wall Street's rally in recent months ahead of a slump last week into correction territory.
Facebook jumped 3.7 per cent while Amazon and Apple both rose more than 1.8 per cent. All three fuelled the S&P 500 more than any other shares, leaving the index up 1.3 per cent for the session. They, along with Netflix and Alphabet - collectively called the Faang stocks - were major contributors to last year's market rally, and all but Alphabet have weathered the recent sell-off better than the broader market.
"Faang is still working. And people feel that because they held up during the downturn, you can come back to them and not get hammered if things turn down again," said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta, Georgia.
"There is still a fear of missing out."
Since Thursday, the S&P 500 has surged 4.5 per cent, its strongest four-session performance since mid-2016. The index remains down about 6 per cent from its record high on January 26.
The Labour Department's core Consumer Price Index, which excludes the volatile food and energy components, increased 0.3 per cent in January, while economists polled by Reuters had forecast an increase of 0.2 per cent. However, the year-on-year rise was unchanged at 1.8 per cent.
The data raised the specter of rising inflation and rekindled fears that the Federal Reserve could be forced to be more aggressive with interest rate increases.
But those inflation concerns were tempered by data showing US retail sales fell 0.3 per cent last month, the biggest decline in nearly a year and in sharp contrast to economists' estimates for a 0.2 per cent increase.
"The CPI shows there is some inflation, but it was not through the roof," said Bruce Bittles, chief investment strategist at Robert W Baird & Co in Nashville. "People got too pessimistic".
Underpinning confidence among many investors is the belief that the US economy remains strong and that tax cuts enacted this year will spur corporate earnings and lead consumers to spend more.
The Dow Jones Industrial Average jumped 1.03 per cent to end at 24,893.49 while the S&P 500 rose 1.3 per cent to finish at 2,698.63.
The Nasdaq Composite surged 1.8 per cent to 7,143.62.
Benchmark US 10-year Treasury note yields hit a four-year high, but a key measure of near-term volatility fell, in contrast to its reaction to strong US jobs and wages data earlier in the month.
The CBOE Volatility index fell below 20 for the first time since February 5.
The VIX slipping below 20 is "a very good sign", said Bucky Hellwig, senior vice president at BB&T Wealth Management. "It shows the volatility is getting priced out of the market."
Seven of the 11 major S&P 500 sectors rose, with financials rising 2.3 per cent and information technology up 1.95 per cent.
Fossil surged 87.7 percent after the watchmaker's strong holiday-quarter sales and a rush among short-sellers to cover their positions.
Chipotle Mexican Grill jumped 15.4 per cent after it hired Brian Niccol from Taco Bell as its next chief executive, which analysts said sparked hopes of a quicker turnaround.
Advancing issues outnumbered declining ones on the NYSE by a 2.28-to-1 ratio; on Nasdaq, a 2.94-to-1 ratio favored advancers.
About 7.8 billion shares changed hands in US exchanges, compared with the 8.4 billion daily average over the last 20 sessions.