Stocks edge higher as investors weigh growth, inflation

U.S. stocks edged higher Wednesday as investors continue to monitor the economic recovery and rising inflation.

The S&P 500 was up 0.2% as of 11:38 a.m. Eastern. The Dow Jones Industrial Average, which turned 125 years old, rose 38 points, or 0.1%, to 34,349. The Nasdaq rose 0.5%.

A variety of companies that rely on direct consumer spending made solid gains. Dick’s Sporting Goods jumped 16.7% after reporting a surge in first-quarter sales and solid earnings as team sports returned. Urban Outfitters rose 14.5% and Abercrombie & Fitch rose 14.8% on similarly strong financial results. Those companies, along with hotels and cruise lines, are poised for growth as more people get back to some semblance of normal with vaccinations increasing and the pandemic seemingly receding.

Gains from retailers and communications companies were kept in check by lagging technology and healthcare company stocks.

Markets have been bumpy over the last few days as investors move past a stellar corporate earnings season and await additional clues on economic growth.

“That’s just going to be the state of market environment for some time to come,” said Kristina Hooper, chief global market strategist at Invesco

The next key economic update is set for Thursday, when the Commerce Department releases its latest GDP report for the first quarter. Economists are expecting a huge rebound in 2021 and results from the beginning of the year will give Wall Street a clearer picture moving forward

The growing economy has also raised inflation concerns, though analysts expect that much of the increase will be tied to economic growth and will be digestible. Much of the concern centers around stronger inflation prompting governments and central banks to roll back economic stimulus and change course on interest rates. Federal Reserve officials have said that they see no need yet to change course.

Bond yields remained relatively steady. The yield on the 10-year Treasury held at 1.56% from late Tuesday.

“Investors need to stop worrying about short-term concerns around The Fed and inflation,” Hooper said. “That’s really creating a lot of the churn we’re seeing.”

Online retail giant Amazon is buying MGM, the movie and TV studio behind James Bond, “Legally Blonde” and “Shark Tank,” with the aim of filling its video streaming service with more shows to watch. The announcement left the stock little changed.

Markets in Europe were mixed. The FTSE 100 in London fell 0.1%, while Germany’s Dax fell 0.1% and France’s CAC 40 rose 0.1%. Markets in Asia were broadly higher.

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