Wall Street sees big gains on earnings as inflation rises

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Wall Street sees big gains on earnings as inflation rises

NEW YORK, November 18, Reuters -- Both the S&P 500 and the Nasdaq hit record closing highs Thursday after a topsy-turvy Thursday, as investors focused on upbeat retail and technology earnings that outshone hawkish inflation comments from a Federal Reserve policymaker.

As Cisco Systems Inc weighed on the benchmark, the Dow continued to play the laggard, registering its third decline this week.

Inflation is becoming more broad-based, and expectations for future price increases are rising, and stock markets initially fell after New York Federal Reserve Bank President John Williams said inflation is becoming more broad-based and that expectations for future price increases are rising.

The S&P and Nasdaq had rebounded late in the morning, with the latter supported by Nvidia. The chipmaker went up after beating quarter estimates and forecasting strong fourth-quarter revenue.

The Philadelphia semiconductor index hit a new record high before it too dipped a bit.

The S&P consumer discretionary sector led gains among its peers as positive retail earnings from Macy's and Kohl's came together with upbeat reports from Walmart and Target Corp earlier this week.

Macy's Inc jumped after it raised its annual earnings guidance and flagged plans for a potential spinoff of its ecommerce division.

The S&P 500 retailing index broke its intraday record this week, as investors saw the earnings as a sign of robust consumer demand that has persevered through rising inflation and retailers were set for a strong holiday season.

The consumer is stronger than expected, and it's good news for the country as a whole. Mike Zigmont, head of research and trading at Harvest Volatility Management in New York, said that a stronger consumer is a reflection of a strong economic bounce.

Concerns over further increases in price pressure, along with uncertainty over the Fed's plans for tightening have kept Wall Street muted this week.

Eric Metz, chief investment officer of Chicago-based SpiderRock Advisors, said that settling in is going to be healthy for us to take the next leg up and we definitely hit overbought territory.

I think there is a pretty stable footing underneath us, outside of Fed policy or large earnings disappointments, but markets can be fickle and so staying prudent is the name of the game right now. The Dow Jones Industrial Average fell by 59.71 points, or 0.17%, to 35,871. The S&P 500 gained 15.9 points, or 0.34%, to 4,704. 57 and the Nasdaq Composite added 72.14 points, or 0.45%, to 15,993. The Dow was trailing behind its peers on steep losses in network gear maker Cisco, which fell after it forecast current-quarter revenue below expectations due to supply chain shortages and delays.

Visa declined for a second day after it was announced that Amazon.com Inc may pare back its relationship with the payments company.