Wall Street gains, Treasury yields rise as inflation picks up steam

Wall Street gained ground on Friday after solid US inflation data and an uptick in Treasury yields suggested the economic recovery from the pandemic recession was gaining momentum.

All three major US stock indexes were on track to post weekly gains as upbeat economic data boosted risk appetite ahead of first-quarter earnings.

Transports, seen as a proxy for economic health, were on track for their 10th straight weekly advance.

"It’s a nice end to a good week," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. "The rise in transports is a good sign that the economy is beginning to open up."

A Labor Department report showed producer prices rose last month at twice the speed of February's growth, reviving some inflation worries.

"No question we're seeing prices increase at the producer level and the big question is when that transfer down to the consumer?" Detrick added. "The Fed has stressed from the very beginning these increases will be transitory."

Indeed, US Federal Reserve Chairman Jerome Powell offered assurances on Thursday that the central bank is far more concerned about the recent uptick in COVID-19 infections than inflationary pressures.

The Dow Jones Industrial Average rose 148.06 points, or 0.44 per cent, to 33,651.63, the S&P 500 gained 12.84 points, or 0.31 per cent, to 4,110.01 and the Nasdaq Composite added 9.11 points, or 0.07 per cent, to 13,838.42.

European stocks ended nominally higher, but marked their longest winning streak since November 2019 on rising hopes of a rapid economic rebound.

The pan-European STOXX 600 index rose 0.08 per cent and MSCI's gauge of stocks across the globe gained 0.05 per cent.

Emerging market stocks lost 1.02 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.85 per cent lower, while Japan's Nikkei rose 0.20 per cent.

US Treasury yields rose in the wake of the PPI report, which provided further evidence that the world's largest economy was on a stable road to recovery from the pandemic.

Benchmark 10-year notes last fell 10/32 in price to yield 1.6656 per cent, from 1.632 per cent late on Thursday.

The 30-year bond last fell 13/32 in price to yield 2.3418 per cent, from 2.322 per cent late on Thursday.

The dollar was up against a basket of world currencies as inflation date lifted bond yields, but the greenback appeared set for its softest week of the year on upbeat economic data and the dovish Fed.

The dollar index rose 0.11 per cent, with the euro down 0.11 per cent to $1.1899.

The Japanese yen weakened 0.38 per cent versus the greenback at 109.68 per dollar, while Sterling was last trading at $1.3712, down 0.15 per cent on the day.

Crude oil prices dipped on rising supply amid a mixed picture on demand recovery from the COVID slump.

US crude dipped 0.47 per cent to settle at $59.32 per barrel, while Brent crude settled at $62.95 per barrel, falling 0.4 per cent on the day.

Gold withdrew from Thursday's one-month peak, weighed down by a rebounding dollar and rising Treasury yields. Still, the safe-haven metal appears headed for its first weekly gain in three.

Spot gold dropped 0.8 per cent to $1,742.08 an ounce.