Dow Jones hits record high in stock rally as inflation fears fall and Congress passes $1.9 trn Covid relief bill

It comes as $1,400 stimulus checks and an accelerating vaccine roll out give investors confidence in a controlled economic recovery

The Dow Jones Industrial Average rallied to an all-time high after a key measure of inflation and the passing of the $1.9trn Covid relief bill calmed worries and increased confidence on Wall Street on Wednesday.

Consumer price data for February came in lower than expected, easing concerns that prices would rise too quickly as the US economy recovers from the coronavirus pandemic lockdowns.

“It’s clear that investors expect there to be a bump in inflation in the short term, but the long-term view is pretty benign,” Katie Nixon, chief investment officer at Northern Trust Wealth Management, told the Associated Press.

“Investors are coming around to the view that it’s not a bad backdrop for risk assets.”

The Dow rose 1.5 per cent to 32,297 points bolstered by a 6.4 per cent jump in Boeing, while the broader S&P 500 rose 0.6 per cent. The tech-heavy Nasdaq, meanwhile, posted a small loss of less than 0.1 per cent on the back of technology companies giving back some of their gains from an earlier rally on Tuesday.

While the Labor Department said February’s 0.4 per cent increase in consumer prices were the largest in the past six months, a measure called “core inflation”, which excludes food and energy, grew by only 0.1 per cent; below analyst expectations.

It comes as the $1.9trn Covid relief stimulus package and an expected economic surge following an accelerating vaccine roll out give investors confidence in a controlled economic recovery.

While the $1,400 stimulus checks are expected to have an indirect impact on the stock market, they could also directly boost “meme” stocks and other stock popular among retail investors.

Americans could begin receiving the direct payments into their bank accounts by the end of March after the House of Representatives passed Joe Biden’s Covid relief package.

The president will sign the bill into law on Friday, extending the federal unemployment programme that gives laid-off Americans $300 per week in addition to their state unemployment aid.

In a statement, Mr Biden said the legislation is about “giving the backbone of this nation – the essential workers, the working people who built this country, the people who keep this country going – a fighting chance”.