Inflation report gives markets a healthy boost
NEW YORK - Wall Street barreled higher again yesterday after the week's most anticipated economic reading indicated that inflation - excluding the price of gas - remained tepid last month. That eased some concerns that have jolted stock and bond markets in recent sessions.
NEW YORK - Wall Street barreled higher again yesterday after the week's most anticipated economic reading indicated that inflation - excluding the price of gas - remained tepid last month. That eased some concerns that have jolted stock and bond markets in recent sessions.
The Dow Jones industrial average surged more than 344 points in the last three trading days for its biggest three-day point gain since November 2004. The blue-chip index is now less than 40 points below its record close reached June 4.
Investors were enthusiastic because the core consumer price index, which excludes volatile food and energy prices, rose just 0.1 percent. The figure, which the inflation-wary Federal Reserve watches closely, was below the 0.2 percent increase Wall Street forecast.
The yield on the benchmark 10-year Treasury note fell to 5.16 percent yesterday from 5.23 percent late Thursday after release of the CPI report helped ease concerns that the Fed might raise interest rates this year.
Rob Lutts, president and chief investment officer at Cabot Money Management Inc., said that concerns about inflation have been overblown and that increased trade and further intertwining of world economies would stave off major spikes in prices.
The "numbers showed us that the little spook we had last week and earlier this week was misplaced," he said.
The Dow jumped 85.76, or 0.63 percent, to 13,639.48.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 9.94, or 0.65 percent, to 1,532.91, moving near its record close of 1,539.18, hit June 4.
The Nasdaq composite index, still well off its record levels reached during the dot-com boom, rose 27.30, or 1.05 percent, to 2,626.71.
For the week, the Dow rose 1.60 percent, the S&P 500 index rose 1.67 percent, and the Nasdaq composite index gained 2.12 percent. The S&P 500 and the Nasdaq more than offset their losses of last week, while the Dow regained nearly all the ground it had lost.
Amid its enthusiasm over the week's inflation readings, Wall Street looked past a preliminary Reuters/University of Michigan reading on June consumer sentiment that showed the public was not as upbeat as last month.
In corporate news, Goldman Sachs raised its rating on chip-maker Intel to "buy" from "neutral," saying an increase in outsourcing by rival Advanced Micro Devices Inc. could benefit Intel. Intel rose $1.01, or 4.4 percent, to $24.24, making it the biggest gainer among the 30 Dow components. AMD slipped 15 cents to $13.63.
Advancing issues outnumbered decliners by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 3.39 billion shares, up from 2.80 billion Thursday.
Volume was inflated somewhat by the quarterly expiration of stock options, what's known as a quadruple witching day.
