June 28, 2021: -On Friday, U.S. stocks increased, with the S&P 500 building on its rally to record, as investors bet that higher inflation will be not permanent as the economy continues to recover from the pandemic.

The broad equity benchmark increased 0.2% to hit another all-time high. The Dow Jones Industrial Average increased 160 points, or 0.5%, while the Nasdaq Composite gained 0.2%.

Wall Street extended gains after a critical inflation indicator that the Federal Reserve uses to set policy increased 3.4% in May. The fastest increase since the 1990s, the Commerce Department reported on Friday. The reading matched the expectation from economists polled by Dow Jones.

The core personal consumption expenditures price index increase reflected the rapid economic expansion and resulting price pressures. It amplified how far the nation has come since the pandemic-induced 2020 shutdown.

“This provided support to the argument of Fed that inflation is transitory and will help allay fears that we are witnessing runaway inflation,” the senior global Investment analyst at Commonwealth Financial Network, Anu Gaggar, said. “This should continue to provide support to risk assets such as equities.”

On Thursday, the S&P 500, which closed at a record, is high 2.6% for the week, which would be its best gain since the start of April. The Dow is up by 3.2% this week, and the Nasdaq has been up to 2.6% since last Friday.

Nike’s stock surged 14%, helping to boost sentiment for the Dow. The company reported earnings and revenue that blew past Wall Street estimates. Digital sales also jumped 41% since last year and 147% from two years ago.

On the flipside, on Friday, FedEx dipped 4% despite beating its earnings on the top and bottom lines. FedEx also gave a solid outlook per year.

The Federal Reserve announced the industry could easily withstand a severe recession. In releasing the results of its annual stress test, the Fed said the 23 institutions in the exam of 2021 remained “well above” minimum required capital levels in a hypothetical economic downturn. The decision cleared the route for the banks to produce the dividends and buy back more stock, which was suspended in the pandemic.

On Thursday, President Joe Biden announced that the White House struck an infrastructure deal with a bipartisan group of senators. The lawmakers have worked for weeks to craft a nearly $1 trillion package that could get through Congress with support from the parties. The framework includes $579 billion in new spending on transportation such as roads, bridges, and rail, electric vehicle infrastructure, and electric transit, among other things.

Shares of Caterpillar came up to 2.6% on optimism around an infrastructure deal on Thursday. The stakes were higher by 1% on Friday.

The stock market came back from the previous week’s swoon induced by worries about a tighter Federal Reserve. In the previous week, the Dow fell 3.5%, and the S&P 500 shed 1.9% as the Fed moved up its timeline for interest-rate increases.