NEW YORK (AP) — Wall Street advanced yesterday after a better-than-expected report on consumer prices tempered some of the market’s concerns about inflation.
The Labor Department’s report that consumer prices advanced 0.2 percent last month after rising 0.3 percent in March seemed to alleviate investors’ worries that the recent surge in energy costs would force prices throughout the economy to spike higher. The moderation in prices comes despite the largest jump in food prices in 18 years.
Wall Street has been concerned that higher food and energy costs are cutting into consumers’ ability to spend. Any pullback is an unnerving prospect for investors because consumer spending accounts for more than two-thirds of U.S. economic activity.
The Dow Jones Industrial Average rose 66.20, or 0.51 percent, to 12,898.38. A late sell-off in technology stocks caused the market to pare its gains, with the blue chip index periodically up more than 150 points.
Broader stock indicators also advanced. The Standard & Poor’s 500 Index rose 5.62, or 0.40 percent, to 1,408.66. The Nasdaq Composite Index rose 1.58, or 0.06 percent, to 2,496.70.
Light, sweet crude oil fell $1.58 to settle at $124.22 a barrel on the New York Mercantile Exchange.
Bond prices ticked lower as stocks advanced. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.91 percent from 3.94 percent late Tuesday.
The dollar was mixed against other major currencies, while gold prices fell.
Though yesterday’s data was comforting and major indexes are approaching their highs of the month, that doesn’t mean Wall Street has conquered its problems and is set for a rebound from months of turmoil. Analysts warn that examining stocks by sector shows that one in particular is still lagging — financials.
Steve Goldman, chief market strategist at Weeden & Co., said he remains troubled about the financial industry’s underperformance amid lingering worries that the credit crisis is not over. He said that sector has been pulled higher by the market’s recent overall rise, but isn’t in a leadership position to spark a rally.
“They tend to outperform the S&P by a 50 percent margin, but we’re not seeing that at all,” he said of financials. “This has been a nice rally, but for those of us that are bullish about the market, we’re going to need to see them outperform in order to feel comfortable going long.”
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