Wall Street equity markets moved further into record territory as investors shrugged off a high US inflation reading to focus on President Joe Biden’s latest stimulus deal.

The S&P 500 index gained 0.2 per cent in early New York dealings, putting the blue-chip equity gauge on course for its latest record closing high. The technology-focused Nasdaq Composite inched up 0.1 per cent.

US stock markets also hit all-time highs on Thursday after Biden secured an infrastructure spending deal worth about $1tn, boosting industrial, energy and financial stocks.

Data on Friday showed core personal consumption expenditure in the US, the Federal Reserve’s preferred measure of price rises, hit 3.4 per cent in the 12 months to May, in the largest increase for 29 years.

The month-on-month inflation rise was slightly below economists’ expectations, however, potentially taking some pressure off the US central bank to change its ultra-loose monetary policy.

“We’re seeing a small sigh of relief, with equities also supported by the infrastructure news,” said Keith Parker, chief US equity strategist at UBS. Expectations that companies would report strong second-quarter earnings as they reaped the benefits of the US economy’s reopening were also “a strong tailwind”, he added.

The yield on the benchmark 10-year Treasury bond was unmoved at 1.496 per cent after the inflation data.

“There is little doubt that inflation prints in the next few months will continue to be high,” said Francesco Sandrini, senior multi-asset strategist at fund manager Amundi.

“But markets are struggling to find confidence in terms of what to do about it” following mixed messages from Fed officials about whether price rises should result in tighter monetary policy, he said.

Fed chair Jay Powell has characterised booming inflation in the world’s largest economy, which has the potential to erode the long-term returns from stocks and bonds, as transient.

St Louis Fed president James Bullard indicated on Thursday that he thought price rises were more problematic. “A new risk is that inflation may continue to surprise to the upside,” he said in a presentation.

Bullard and Atlanta Fed chief Raphael Bostic have both said in recent days that the central bank’s first post-pandemic rate rise could come next year, although most Fed officials expect it in 2023.

Investors holding bonds, which are more sensitive to inflation than equities, also fear price rises are becoming more persistent as jumps in agricultural commodities translate into higher food costs.

A Bank of America survey published on Friday found that inflation was the issue credit investors were most worried about, for the first time since April 2018.

“Inflation angst, though, is less about normal measures,” the authors of the BofA survey said. “The 40 per cent [year-on-year] rise in global food prices” risked “ushering in higher policy uncertainty”.

Elsewhere in markets, international oil benchmark Brent crude rose 0.3 per cent to $75.75 a barrel. The dollar index, which measures the greenback against major currencies, dipped 0.3 per cent. The euro was up 0.3 per cent against the dollar at $1.1968.

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