US stocks advanced while treasury yields dropped following May's higher-than-expected May inflation report, signaling investor optimism price pressures will abate as the Federal Reserve expects.
The S&P 500 set an intraday record high before pulling back slightly to a gain of 0.4% at 4,236.48. The Dow Jones Industrial Average was fractionally higher at 34,461.30 while the Nasdaq Composite was up 0.7% to 14,002.50. Healthcare and real estate stocks led the way, while banks lagged, with the Financial Select Sector SPDR Fund (XLF) down 1.2%.
The 10-year Treasury yield fell to a three-month low of 1.46% despite a 0.6% rise in the Consumer Price Index in May, ahead of expectations for a 0.5% increase after the 0.8% gain in April. Core CPI excluding food and energy rose 0.7%, topping the consensus estimate for a 0.5% increase.