US Stocks Edge Up As Inflation Fears Ease

US stocks closed out Wednesday's session with modest gains as recent comments from Federal Reserve officials helped tamp down concerns about runaway inflation and kept bond yields in check.

Stocks such as Tesla and Alphabet, which have struggled in recent weeks as bond yields advanced due to rising inflation worries, were among the top boosts to the benchmark S&P 500 index with the 10-year US Treasury note holding below the 1.6 percent level.

On Wednesday, Fed vice chair for supervision Randal Quarles said he was prepared to open talks on reducing the central bank's emergency support measures, only to also stress the need to remain patient.

Multiple Fed officials have commented in recent days on inflation, maintaining the central bank views it as transitory and has the tools to clamp down if it begins to run too hot. However, they have also edged closer to starting the debate about tapering, or reducing, its massive fiscal stimulus plan.

"It feels like everybody is giving a very slow but choreographed message that things are improving, we can at least start talking about talking about tightening," said Andrew Mies, chief investment officer at 6 Meridian in Wichita, Kansas.

"It could be that the wrong Fed governor says the wrong thing in the next couple of weeks and that kicks it off."

Higher yields pressure growth stocks, many of which are technology and tech-related, whose future cash flows are discounted at higher rates.

The Dow Jones Industrial Average rose 0.03 percent, to 34,323, the S&P 500 gained 0.19 percent, to 4,196 and the Nasdaq Composite added 0.59 percent, to 13,738.

After fears of rising inflation sparked volatility in equity markets in recent weeks, all eyes will be on the closely watched monthly U.S. personal consumption report, the Fed's favorite inflation gauge, due later in the week.

Trading volumes are likely to lessen heading into the extended Memorial Day holiday weekend, which could exacerbate price moves.

Amazon ticked 0.19 percent higher after announcing it is buying MGM, the US movie studio home to the James Bond franchise, for US$8.45 billion, giving it a huge library of films and TV shows and ramping up competition with streaming rivals led by Netflix and Disney+. (Reuters)