(AP) -- Stocks were solidly higher in early trading Thursday, as investors reacted positively to a report on inflation that while not great, was not as bad as some feared. Health care and technology companies were among the biggest gainers.
The S&P 500 index rose 0.5% as of 10:15 a.m. Eastern. The Dow Jones Industrial Average was up 0.5% and the Nasdaq Composite rose 0.6%.
Stock prices rose and bond yields were steady after the Labor Department said consumer prices jumped 5% in May, the biggest year-over-year increase since 2008. The figure was higher than the 4.6% rise that economists on average had expected,
While investors have been concerned about inflation for weeks, the May report seemed to reinforce the growing consensus that any inflation will be temporary. A significant portion of the rise in consumer prices were tied to the sale of used cars, for example, which is largely attributed to the fact that many rental car companies are buying vehicles to beef up their fleets as people return to traveling.
"Keep in mind that as we start to make our way back to a full economic recovery, there is pent up demand and supply constraints from raw material and labor shortages," said Mike Loewengart, a managing director at ETrade Financial. "This creates the type of inflation that the Fed believes is transitory, meaning it too shall pass. Whether or not they are correct remains to be seen."
The bond market was steady after the inflation data, with the yield of the 10-year U.S. Treasury note holding at 1.49%.
Investors also reacted positively to more jobs data that showed continued improvement in the labor market. The number of Americans who filed for unemployment benefits last week fell by 9,000 to 376,000, another pandemic low.
Markets are also watching for developments from a summit of the Group of Seven in Britain. At the top of the leaders' agenda is helping countries recover from the coronavirus pandemic, which has killed more than 3.7 million people and wrecked economies.
The G-7 leaders are meeting for three days at a British seaside resort. It's the first such gathering since before the pandemic.