NEW YORK – 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 gained 0.2 percent in April 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 rose 66.2 points, 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 at times up more than 150 points.
Broader stock indicators also advanced. The Standard & Poor's 500 index rose 5.62 points, or 0.4 percent, to 1,408.66. The Nasdaq composite index rose 1.58 points, or 0.06 percent, to 2,496.7.
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 held at 3.91 percent. The dollar rose against other major currencies, while gold prices fell.
In corporate news, Macy's Inc. reported that it lost $59 million in the first quarter because of weaker sales and costs tied to combining businesses. But the results topped Wall Street's expectations, and the stock rose 87 cents to $24.93.
Deere & Co. said its fiscal second-quarter profit rose 22 percent as higher crop prices drove global demand for its farm equipment. But the company said rising costs of raw materials could eat into its profits in the coming months. Deere fell $8.94 to $81.25.
Freddie Mac beat Wall Street's expectations in the first quarter, but the mortgage finance company didn't vanquish concerns about its ability to weather the housing bust. The application of new accounting rules helped Freddie Mac achieve better-than-expected results.
“If you change the accounting rules, things can look better,” said R. Christopher Whalen, managing director of consulting firm Institutional Risk Analytics.
Freddie Mac's shares gained $2.29 to $27.25.
Yahoo Inc. rose 58 cents to $27.14 after Tuesday's report that billionaire investor Carl Icahn is reportedly loading up on the Internet icon's stock to oust the board in hopes for a renewed bid from Microsoft.
Advancing issues outnumbered decliners by more than 3-to-2 on the New York Stock Exchange, where consolidated volume came to 3.86 billion shares, which is about even with Tuesday.
The Russell 2000 index of smaller companies fell 0.78 of a point, or 0.11 percent, to 736.07.
Overseas, Japan's Nikkei stock average rose 1.18 percent. In afternoon trading, Britain's FTSE 100 gained 0.07 percent, Germany's DAX index rose 0.33 percent, and France's CAC-40 advanced 1.13 percent.
