As inflation appears to be a one-time event, the S&P 500 is on track to set a new high

The S&P 500 was on track to close at an all-time high on Thursday, as the much-anticipated consumer price index report indicated that the current inflation surge is just temporary.

As inflation appears to be a one-time event, the S&P 500 is on track to set a new high.

All three major U.S. stock indexes were up, with the Nasdaq leading the way thanks to market-leading megacap firms. However, economically vulnerable transportations and smallcaps were in the red.

Despite the Federal Reserve's promises to the contrary, the Labor Department's consumer price index (CPI) data came in above consensus, adding fuel to the argument over whether current price spikes could turn into long-term inflation. 

However, a closer examination revealed that majority of the price increase was due to commodities and airfares, and hence is likely to be temporary.

"Another upward surprise," said Colin Asher, senior economist at Mizuho in London. "However, an important point is that quite a bit of it is still in the transitory category, so I don't think the Fed will be overly concerned." 

"In general, I believe the Fed's message that inflation concerns are transitory is gaining traction," Asher added. "(This CPI print) has to be close to the pinnacle."

A House of Representatives committee approved a $547 billion surface transportation infrastructure plan, which includes some of President Joe Biden's recommendations as part of a larger $2.3 trillion infrastructure package. 

Despite this, the industrial and transportation sectors, which stand to benefit from infrastructure development, were in the red.

The Dow Jones Industrial Average rose 126.15 points, or 0.37%, to 34,573.29; the S&P 500 gained 25.09 points, or 0.59%, at 4,244.64; and the Nasdaq Composite added 108.76 points, or 0.78%, at 14,020.51. 

Among the 11 major sectors of the S&P 500, healthcare enjoyed the largest percentage gains.

Interest-rate-sensitive financials, on the other hand, were the largest losers, driven down by falling US Treasury yields. 

The stock most closely identified with the social media-driven "meme stock" craze, GameStop Corp (NYSE:GME), fell 22.0 percent after the gaming retailer suggested it may sell fresh shares.

Clover Health Investments Corp, AMC Entertainment (NYSE:AMC) Holdings, Bed Bath & Beyond Inc (NASDAQ:BBBY), and GEO Group, which have benefited from the retail short-squeeze rally, have all fallen between 8% and 18%.

Boeing (NYSE:BA) increased by 0.9 percent after Reuters reported that United Airlines was in talks to place a multibillion-dollar order for single-aisle planes that may be shared between Boeing and Airbus.

Pfizer Inc (NYSE:PFE) jumped 1.9 percent after it was announced that the US would pay the drugmaker $3.5 billion for 500 million COVID-19 vaccine shots that it plans to provide to the world's poorest 100 countries.

On the NYSE, advancers outnumbered decliners by a 1.39-to-1 ratio; on the Nasdaq, advancers outnumbered decliners by a 1.11-to-1 ratio. 

The S&P 500 made 57 new 52-week highs while the Nasdaq Composite made 92 new highs and 11 new lows.

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