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S&P 500 Ends at Record; Stocks Gain on Hopes Inflation Has Peaked

U.S. stocks ended higher Friday, with the S&P 500 closing at a record and Apple approaching a $3 trillion market cap,  as investors shrugged off the latest inflation data on hopes price increases have peaked.

U.S. stocks ended higher Friday, logging weekly gains in the major indexes as investors shrugged off a key reading of consumer price inflation.

The S&P 500 ended at a record, gaining nearly 1% to 4712.02. The Nasdaq gain 0.73%, helped by Apple AAPL, which closed at a record and is drawing closer to a $3 trillion market capitalization. The Dow Jones Industrial Average gained 0.6%.

November inflation accelerated to the fastest pace in four decades, with headline CPI tabbed at 6.8%. Most of the underlying tallies matched Wall Street forecasts, while the monthly gain for core inflation came in modestly lighter, potentially suggesting tamer readings to come. 

Still, the implications for Federal Reserve policy are notable; Chairman Jerome Powell's hawkish turn last week, alongside his decision to retire the word "transitory" in terms of inflation pressures, likely means a faster pace of bond purchase tapering from the central bank next week, as well as earlier-than-expected rate hikes later this summer.

"While the higher level of inflation is uncomfortable, it is also expected. For investors, those without some degree of commodity or other inflation offsets should start to incorporate those segments into their portfolio," said George Bell, chairman of Houston-based investment group Sanders Morris Harris.

"We expect inflation to top 5% in the first half of 2022 and it's likely to subside modestly to 4% or so during the second half of 2022," he added. "Those aren’t great numbers but neither will they require Volckerian intervention."

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Benchmark 10-year Treasury note yields eased to 1.485% in New York trading.

Moderna  (MRNA) - Get Moderna, Inc. Report shares were active, falling 5% after the drugmaker posted early stage data from its developing seasonal flu vaccine as investors await an update on the efficacy of its Covid vaccine against the newly-identified Omicron variant. 

Oracle  (ORCL) - Get Oracle Corporation Report shares, meanwhile, surged 16% after the cloud-focused software group posted better-than-expected second quarter earnings and a robust near-term outlook.

Costco Wholesale  (COST) - Get Costco Wholesale Corporation Report shares gained 6% after the bulk discount retailer posted stronger-than-expected third quarter earnings while cautioning that supply chain disruptions could impact holiday season inventories.

Broadcom  (AVGO) - Get Broadcom Inc. Report shares rose 7%, lifted by a wave of positive news on sales and earnings, a dividend boost, the unveiling of a new stock repurchase program and the company’s growth outlook on the hyper-cloud front.

Tesla  (TSLA) - Get Tesla Inc Report shares, too, were active, edging up 1% as CEO Elon Musk continues to offload Tesla stock, with the world’s richest man dumping another near-$1 billion worth of his electric car company’s shares.

WTI crude futures for January delivery were up about 1%, while Brent contracts for February, the global pricing benchmark, gained 62 cents to $75.03 per barrel.