U.S. stocks end higher, erasing weekly loss for the S&P 500

Healthcare and technology companies helped drive stocks higher Thursday, bringing the Standard & Poor’s 500 index to a record and out of the red for the week.

The benchmark index rose 0.5% and is on track for its third straight weekly gain. Bond yields initially rose, then mostly fell after a much-anticipated report showing a big jump in inflation last month.

The Labor Department said consumer prices jumped 5% in May, the biggest year-over-year increase since 2008. The figure was higher than the 4.6% rise that economists had expected.

Investors have been concerned about inflation for weeks, but the May report seemed to reinforce the growing consensus that any increase in inflation will be temporary. A significant portion of the rise in consumer prices was tied to the sale of used cars, for example, which is largely attributed to the fact that many rental car companies are buying vehicles to beef up their fleets as people return to traveling.

The S&P 500 gained 19.63 points to 4,239.18, just beating the index’s previous all-time high set May 7. The Dow Jones industrial average edged up 19.10 points, or 0.1%, to 34,466.24. The Nasdaq composite rose 108.58 points, or 0.8%, to 14,020.33.

Smaller-company stocks lagged behind the broader market. The Russell 2000 index fell 15.72 points, or 0.7%, to 2,311.41.

Bond yields initially rose after the inflation data, then fell broadly by late afternoon. The yield on the 10-year Treasury note slipped to 1.45% from 1.49% late Wednesday.

Organon jumped 6.6% for the biggest gain in the S&P 500 and Pfizer rose 2.2% as healthcare stocks led the market higher. Technology and communication stocks also rose. Microsoft gained 1.4% and Activision Blizzard added 1.2%. Banks and industrial and materials companies were among the decliners. JPMorgan slid 1.6%, while Caterpillar dropped 3.8%. Vulcan Materials fell 3.1%.

Investors also reacted positively to more data that showed continued improvement in the labor market. The number of Americans who filed for unemployment benefits last week fell by 9,000, to 376,000, another pandemic low.

Stocks have been meandering all week as investors looked ahead to another inflation snapshot. The worry is that if signs of inflation are more than transitory, as the Federal Reserve has suggested, it could prompt central banks to withdraw stimulus from the economy to combat rising prices.

Investors will get to see next week how the Fed is reading the latest inflation barometer and what monetary policy changes, if any, the central bank may consider. The Fed’s policymaking committee is due to deliver its latest economic and interest rate policy update Wednesday.

Markets will also be tuning in this weekend for any developments at the summit of the Group of 7 in Britain. At the top of the leaders’ agenda is helping countries recover from the COVID-19 pandemic, which has killed more than 3.7 million people and wrecked economies.

The G-7 leaders are meeting for three days at a British seaside resort. It’s the first such gathering since before the pandemic.