Rising wholesale prices and a jump in oil futures intensified inflation fears yesterday, keeping stocks mixed and sending bond prices falling...
NEW YORK — Rising wholesale prices and a jump in oil futures intensified inflation fears yesterday, keeping stocks mixed and sending bond prices falling. Blue chips saw a late boost from the pharmaceutical sector, but the major indexes finished the week with a loss.
The Labor Department’s report, which showed wholesale prices rising at the fastest rate in six years, caused a selloff on the bond market and pressured stocks as well. While the Producer Price Index rose just 0.3 percent in January, the “core” PPI figure — with food and energy prices removed — rose 0.8 percent, a one-month rise that could signal higher consumer prices down the road.
“Inflation-sensitive stocks are doing well, but that’s about it,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland. “There’s not a lot of reason for people to make bets on too many other sectors.”
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But the Dow Jones industrials and large-cap stocks saw a boost in late trading as federal regulators approved the continued marketing of painkillers from Dow components Merck and Pfizer, saying that benefits for patients outweighed increased risks of heart attack and strokes.
The Dow rose 30.96 to 10,785.22. The Dow is once again up for the year to date — by just 2.21, or 0.02 percent. For the week, the Dow fell 0.1 percent.
Microsoft, one of the 30 Dow stocks, retreated 17 cents yesterday to close at $25.48, off 1.6 percent for the week. Boeing, also a Dow stock, fell 88 cents to $52.78, off 2.5 percent for the week.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was up 0.84 at 1,201.59, while the tech-focused Nasdaq composite index lost 2.72 at 2,058.62. For the week, the S&P was down 0.3 percent, and the Nasdaq dropped 0.9 percent.
Inflation concerns kept the markets from substantially surpassing their December 2004 highs this week, as Federal Reserve Chairman Alan Greenspan, while giving lawmakers a bullish assessment of the economy, warned that higher prices could become an issue.
The yield on the 10-year Treasury bond rose to 4.27 percent as inflation fears caused a selloff in long-term bonds.
“Stocks are definitely seeing a hit from the bond trade,” said Russ Koesterich, U.S. equity strategist for State Street in Boston. “With inflation worries picking up, it’ll be hard for this market to go higher as earnings growth decelerates and interest rates go up.”
A rise in oil prices also pressured stocks. A barrel of light crude was quoted at $48.35, up 81 cents, on the New York Mercantile Exchange.
Only energy, raw materials and the drug sector showed gains after a muddled trading session, and the latter climbed thanks to the Dow’s pharmaceutical components. Merck surged $3.76, or 13.03 percent, to $32.61 after a Food and Drug Administration advisory panel voted narrowly to allow Merck to continue marketing the arthritis drug Vioxx in the United States. The company voluntarily pulled Vioxx from the market last year after it was found to carry an increased risk of heart attack and stroke.
The FDA advisory panel also ruled that two of Pfizer’s pain relievers, Bextra and Celebrex, can remain on the market despite studies that questioned the safety of the drugs. Pfizer gained $1.74 to $26.80.
Options and futures contracts expired yesterday, but the “triple witching day” that commonly causes increased volatility failed to stir the markets.