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

How are markets trading?

The Dow Jones Industrial Average
DJIA,
+0.55%

rose 224 points to 35,487, a gain of 0.6%, near its intraday record high at 35,491.19.

The S&P 500 index
SPX,
+0.12%

was trading 0.2% higher, up 7 points, at 4,444, after establishing an intraday record at 4,449.44.

The Nasdaq Composite Index
COMP,
-0.37%

traded 58 points, or 0.4%, lower at 14,730.

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’s driving markets?

Stocks were mostly climbing 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, also 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 argued 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.

The consumer inflation report comes a day after the Dow and S&P 500 each logged record closes on Tuesday, as investors looked past worries surrounding economic growth and the fast-spreading delta variant of coronavirus. They instead cheered news that the Senate passed a $1 trillion infrastructure bill, sending it to the House of Representatives for its approval.

Read: Stocks and sectors that stand to benefit from $1 trillion infrastructure bill

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 technology shares on Wednesday were under pressure, with the S&P 500’s tech sector
SP500.45,
+0.01%

down 0.1% and healthcare
SP500.35,
-0.84%

off 0.7%, FactSet data show, weighing on the overall broad-market index.

Which companies are in focus?

Shares of Coinbase Global Inc.
COIN,
+2.53%

rose 4% 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 was up 2%.

Wendy’s Co. WEN stock rose 2.6% in Wednesday trading after the burger chain reported second-quarter earnings that beat expectations.

Perrigo Co. PLC shares PRGO slid about 12% 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 were trading up 1.2% Wednesday, 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 are other assets faring?

The yield on the 10-year Treasury note TMUBMUSD10Y fell 2 basis point to around1.33%. 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 headed higher, with the U.S. benchmark CL00 up 1.5% at $69.28 a barrel as 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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