US Markets Push Back To Record Highs Ahead Of Fed

Investors are seeking new cues from the central bank on its inflation outlook, after recent data indicated the US economy is regaining momentum but not overheating. This has eased investor worries about inflation.

While the Fed has reassured that any spike in inflation would be transitory, policymakers could begin discussing the tapering of bond buying at the Tuesday-Wednesday meeting. Most analysts, however, do not expect a decision before the central bank's annual Jackson Hole, Wyoming, conference in August.

Any shift in the Fed's dovish rhetoric could upend equity markets. The three main benchmarks are all trading higher year to date.

"There are really good arguments on both sides of the inflation argument, but to think it's a good idea to make substantive changes right now, based on continued increase in inflation or a transitory rate, seems silly to me," said Mark Stoeckle, CEO and senior portfolio manager of the Adams Funds.

High-growth tech-related stocks, which were at the heart of a sell-off driven by fears of rising rates, have regained their footing this month at the expense of economy-linked industrials , financials and materials stocks.

The Dow Jones Industrial Average fell 0.3 percent to 34,393. But the S&P 500 gained 0.2 percent to 4,255 and the Nasdaq Composite added 0.7 percent to 14,174 - both new record highs.

Tesla gained as CEO Elon Musk tweeted that the electric-car maker may resume bitcoin transactions. Bitcoin vaulted back above US$40,000 on Musk's comments. (Reuters)