Business briefing

The daily business briefing: June 11, 2021

Consumer prices rise at fastest rate since 2008, the S&P 500 reaches a record high, and more

1

Consumer prices jumped by more than expected in May

The Consumer Price Index jumped by 5 percent in May compared to a year earlier, the fastest rate since 2008, the Labor Department reported Thursday. Economists had forecast a 4.7 percent increase. The index, which excludes volatile food and energy prices, increased by 0.6 percent from April to May. The surge came as consumer demand increased as pandemic restrictions eased thanks to widespread vaccinations, while suppliers of goods and services struggled to keep up. The data fueled questions about how bad inflation will get, and how long it will last. "We are at peak heat, this is the moment," said Julia Coronado, founder of the research firm MacroPolicy Perspectives. "We know we'll get a fade — the question is, how big is the fade?"

2

S&P 500 rises to record high

The S&P 500 gained nearly 0.5 percent on Thursday to close at a record high despite federal data showing a sharper than expected rise in consumer prices. The S&P 500 hit an intraday record of 4,249.74 before closing at 4,239.18. The Dow Jones Industrial Average rose by less than 0.1 percent. The tech-heavy Nasdaq jumped by 0.8 percent. The inflation data indicated that prices had jumped at their fastest pace since 2008 as the economy recovered from the recession caused by the coronavirus pandemic. "I think there were a lot of people who held back, who wanted to see the hotter inflation number," CNBC's Jim Cramer said on Squawk on the Street. "Now they've said, 'OK, now that's over with. Let's do some buying.'" U.S. stock futures were flat early Friday as investors weighed their next moves.

3

3rd FDA adviser resigns from committee over Alzheimer's drug approval

A third Food and Drug Administration adviser, Harvard Medical School professor Dr. Aaron Kesselheim, resigned from an independent committee on Thursday over the agency's approval of Biogen's controversial Alzheimer's drug aducanumab, which is being marketed as Aduhelm. "This might be the worst approval decision that the FDA has made that I can remember," said Kesselheim, who served six years on the committee for nervous-system drugs. He said the approval of Aduhelm was wrong "because of so many different factors, starting from the fact that there's no good evidence that the drug works." Two other scientists on the committee resigned earlier this week in response to the approval of the drug after the 11-member committee, which reviewed clinical trial data, rejected it unanimously in November.

4

Jobless claims fall for 6th straight week

The number of Americans applying for unemployment benefits dropped last week to 376,000 from 385,000 the previous week, the Labor Department reported Thursday. Jobless claims have fallen for six consecutive weeks, hitting a series of pandemic-era lows as coronavirus cases dropped and the economy reopened. The number of new claims is still historically high. Before the pandemic hit the U.S. and forced many businesses to shut down, about 200,000 people a week were applying for benefits. But the number has fallen steadily from a January high of more than 900,000. Nearly 3.5 million people were receiving traditional state unemployment benefits, down from 3.8 million the previous week in the latest sign of renewed hiring. The Labor Department reported earlier in the week that there were a record 9.3 million job openings in the country in April.

5

U.S. household wealth jumped in 1st quarter

U.S. households' net worth increased to $136.9 trillion in the first quarter of 2021, rising by 3.8 percent compared to the end of 2020 as falling coronavirus cases and deaths fueled a stock-market surge, according to Federal Reserve data released Thursday. The rise included $3.2 trillion in equity holdings and $1 trillion from skyrocketing real estate values. The S&P 500 gained 7 percent in the quarter as rising corporate earnings, low interest rates, and other factors boosted investors' appetites for stocks. Household net worth has now nearly doubled since a decade ago, as Americans were emerging from the Great Recession. Household debt, which totaled $16.9 trillion, increased at a 6.5 percent rate, the fastest since 2006.

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