Stocks Mixed As Traders Weigh Inflation, Positive US Data

Wall Street and most European stock markets rose on Thursday as traders weighed positive US data, inflation concerns and the economic threat from the Covid-19 Delta variant.

The S&P 500 and Nasdaq finished at fresh records as data indicating an improving labor market and supply chain situation fortified traders worried about the health of the economy.

Most European markets closed higher on another day of solid corporate earnings reports, with aircraft engine-maker Rolls-Royce back in the black in the first half of the year; Siemens seeing quarterly profits triple; and mining giant Glencore targeting a $2.8 billion return to shareholders after good half-year results.

But London's benchmark FTSE 100 index was flat after the Bank of England said it could tighten its monetary policy and warned inflation will surge to four percent this year, double its target.

The central bank, however, kept its record-low interest rate and emergency stimulus intact for now.

The pound was up against the dollar and euro.

In Asia, Hong Kong and indices in China closed lower.

While central bank officials around the world have largely said spiking prices are temporary and the result of the reopening of pandemic-hit economies, investors are betting on interest rates will rise sooner than previously expected to keep a lid on inflation.

Markets also are watching to see when central banks will begin to scale back their huge emergency stimulus packages.

Susannah Streeter, senior markets analyst at Hargreaves Lansdown, said a change of course at the BoE in the short term is unlikely.

However, "it does now look like the monetary policy fist may tighten around interest rates earlier than the bank had previously forecast if the economy continues to rebound."

US stocks were up after government data showed new applications for unemployment benefits fell again last week, while the trade balance figures contained hints of an end to supply chain snarls that have driven up prices.

Patrick O'Hare of Briefing.com said investors seemed to have come to terms with the threat posed by the Delta variant, deciding it was not a game changer for the economy, at least not right now.

"The stock market's overall behavior doesn't connote undue concern about the impact of the Delta variant," he said.

"There is a recognition that it could slow growth some, but there isn't a fear that it will trigger a recession."

The data came a day after disappointing figures from payroll services firm ADP showed US private hiring in July came in at 330,000, the weakest since February.

Investors are now awaiting official US employment data on Friday, which some analysts had forecast to show a gain of as much as a million jobs.