Wall Street ended the week with a sturdy advance yesterday as mild inflation data created a brighter economic picture and strong quarterly...
NEW YORK — Wall Street ended the week with a sturdy advance yesterday as mild inflation data created a brighter economic picture and strong quarterly earnings at General Electric (GE) bolstered the gains. Nonetheless, the major indexes finished lower for the week.
At the close of trading, the Dow Jones industrial average gained 70.75 to 10,287.34, but was off 0.1 percent for the week.
Microsoft, one of the 30 Dow stocks, added 8 cents to close at $24.67 a share, ending up 0.3 percent for the week. Boeing, also a Dow stock, gained $1.01 to $67.50, also up 0.3 percent for the week.
Broader stock indicators also finished higher. The Standard & Poor’s 500 index added 9.73 to 1,186.57, and the Nasdaq composite index rose 17.61 to 2,064.83.
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For the week, the S&P 500 slid 0.8 percent and the Nasdaq dropped 1.2 percent.
Stocks rose after the Labor Department said its core consumer price index (CPI) grew just 0.1 percent in September, a sign that higher prices have so far been limited to the volatile energy sector. Accounting for energy and food, which are excluded from core inflation, the CPI jumped 1.2 percent.
Michael Strauss, chief economist at Commonfund, said that while the core CPI escaped the impact of soaring oil prices last month, that effect should soon work its way into prices elsewhere.
“The market probably did a reasonably good job anticipating this pick up in inflation,” Strauss said. “Investors are relieved there wasn’t more pressure on core inflation. Unfortunately, we’re probably going to see that pressure in the upcoming months.”
Yesterday’s gains helped cushion another uneasy week on Wall Street as a spate of profit warnings renewed concerns that rising oil prices would whittle down corporate earnings. While some of those fears came undone on solid results from GE and aluminum producer Alcoa, investors remained reserved ahead of next week, when third-quarter earnings reports will start to cascade in.
“I think this market now is basically trying to stabilize,” said Peter Cardillo, senior vice president and market analyst at S.W. Bach & Co. “Since the market’s already discounted higher interest rates, higher inflation and murky fourth-quarter guidance, I think today’s action is part of that stabilization.
“Going forward, the market will probably begin to focus on economic activity rebounding in the first quarter,” he said.
The Commerce Department said yesterday that retail sales grew 0.2 percent in September after declining 1.9 percent the month before. But setting aside auto sales, which slumped after incentives boosted summertime demand, retail sales jumped 1.1 percent, compared with economists’ prediction of 0.8 percent.
However, yesterday’s mostly positive economic data were muddled by a weaker reading of consumer confidence. Michigan’s consumer sentiment index for October fell to 75.4 from 76.9 — below economists’ target of 80 — as consumers braced for more impact from the recent storms.
Crude oil dipped amid indications of weak U.S. gasoline demand and reports that more Gulf Coast refineries are coming back on line after being shuttered because of hurricanes Katrina and Rita. A barrel of light crude slid 45 cents to $62.63 on the New York Mercantile Exchange.
GE said its quarterly profit grew 15 percent despite losses from the hurricanes, as earnings expanded at a double-digit rate across all of its businesses. Revenue was 9 percent higher, the company said. GE shares rose 32 cents to $34.34.