The Dow industrials and S&P 500 finished in record territory for a second straight day on Wednesday, after a report on consumer inflation mostly matched expectations, but the broader market faced some headwinds as healthcare and growth shares were sold.

How did markets trade?

The Dow Jones Industrial Average

rose 220.30 points to end at a record 35,484.97, a gain of 0.6%, after hitting an intraday all-time high of 35,501.16.

The S&P 500 index

advanced 0.3%, up 10.95 points, to close at a record 4,447.70, after establishing an intraday record at 4,449.44.

The Nasdaq Composite Index

shed 22.95 points, or 0.2%, finishing at 14,765.14.

On Tuesday, the Dow rose 162.82 points, or 0.5%, to close at 35,264.67, the S&P 500 gained 4.40 points, or 0.1%, to end at 4,436.74, with the Nasdaq Composite moving the other way, closing down 72.09 points, or 0.5%, to 14,788.09.

What drove markets?

Stocks finished mostly higher on Wednesday after a new reading on consumer inflation offered some evidence to calm fears about high costs of living in the U.S. during the pandemic.

The Labor Department reported the July consumer-price index rose 5.4% in July from a year earlier, as price measures of food, energy, shelter and new vehicles rose, while costs of used cars, airfare and auto insurance retreated. The reading was about in line with data on June and slightly lower than some predictions for 5.5%.

The government said the July CPI increased 0.5% for the month, matching expectations, while the core rate, excluding volatile food and energy prices, rose by 0.3%, below expectations of a 0.4% increase, according to average estimates of economists polled by Dow Jones. The 12-month core rate decelerated to 4.3% from 4.5%, which was a 29-year high.

“Given the fact that inflation data matched estimates, there isn’t a huge amount of panic out there,” said Wayne Wicker, chief investment officer at MissionSquare Retirement, which oversees about $74.5 billion in assets under management for public employee retirement plans.

“This month, vehicle price growth eased a bit for used cars and trucks,” Wicker told MarketWatch. “If it remains on that track to reduce the price surge over the past 12-18 months, I think that goes a long way in providing the Federal Reserve with another bullet point that inflation might be transitory in some categories.”

If pricing pressures can moderate in the months ahead, Wicker said that also could help tamp down some of the uncertainties nagging at equity investors as stocks trade in record territory. It also “could be a real positive tailwind for continued earnings growth,” he said.

Key members of the rate-setting Federal Open Market Committee, including Chairman Jerome Powell, have said that they see inflation’s rise amid the COVID pandemic as a short-term phenomenon.

Some analysts also said the market remains focused on the health of the jobs market and wages, as a key part of the Fed’s mandate.

On Wednesday both Kansas City Federal Reserve President Esther George and Dallas Fed President Rob Kaplan argued for tapering the central bank’s bond buying program soon, but late Tuesday Chicago Fed’s Charles Evans advocated for waiting longer. Evans is a voting member of the Fed’s policy-making committee this year, while both George and Kaplan are not, but will be in 2022.

Upbeat quarterly earnings results also have been a big support for recent buying, analysts said. “The post-pandemic earnings for the S&P 500 over the past five quarters has beaten expectations by about 15-20 percent. These are all-time highs that suggest the economic recovery is not only on track, but stronger than many anticipated,” wrote Jonathan Waite, senior research analyst at Frost Investment Advisors, in emailed commentary.

That said, the S&P 500’s tech sector

ended flat, while healthcare

slumped 1%, FactSet data show, weighing on the overall broad-market index.

Which companies were in focus?

Shares of WW International Inc.
the company formerly known as Weight Watchers, plunged 24.6% Wednesday after it said customers were taking a break from their health goals in order to enjoy the summer.

Moderna Inc.

shares fell 15.6% Wednesday as investors seemed to
of the COVID-19 vaccine maker after they nearly tripled in value this year.

Shares of Coinbase Global Inc.

rose 3.2% on Wednesday. In its first report as a public company, the cryptocurrency platform reported sales and profit that beat forecasts, though also a tepid third-quarter outlook.

Chesapeake Energy Corp. CHK, said Wednesday it has reached an agreement to acquire Vine Energy Inc. VEI in a zero-premium cash-and-stock deal valued at about $2.2 billion. Shares of Chesapeake rose 2.6%, while Vine added 2%.

Wendy’s Co. WEN stock rose 3.7% in Wednesday trading after the burger chain reported second-quarter earnings that beat expectations.

Perrigo Co. PLC shares PRGO slid 12.6% Wednesday, after the Dublin, Ireland, based consumer self-care company swung to a loss for the second quarter and lagged behind consensus estimates.

Southwest Airlines Co. shares LUV gained 1.4% Wednesday, even after the airline said slowing bookings and an increase in cancellations in August driven by the delta variant of the coronavirus means it is unlikely to be profitable in the third quarter.

How did other assets fare?

The yield on the 10-year Treasury note TMUBMUSD10Y fell less than 1 basis point to around 1.339%. Yields and debt prices move in opposite directions.

The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, fell 0.2%, a day after hitting its highest level since March.

Oil futures closed higher, with the U.S. benchmark CL00 up 1.4% to settle at $69.25 a barrel after the Biden administration said it would press the Organization of the Petroleum Exporting Countries and its allies to further boost output. Gold futures GC00 closed higher, rising 1.2% to settle at $1,753.30 an ounce.

In European equities, the Stoxx Europe 600 SXXP closed about 0.4% higher and London’s FTSE 100 UKX finished 0.8% higher.

Asian equities rose, with the Shanghai Composite SHCOMP up less than 0.1%, Hong Kong’s Hang Seng Index HSI closed up 0.2%, while Japan’s Nikkei 225 NIK climbed 0.7%.

Barbara Kollmeyer contributed reporting

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