Investors Again Cheered by Inflation News
Wall Street emerged from the summer doldrums Wednesday as a second straight day of tame inflation data sent stocks sharply higher and pushed the Dow Jones industrial average to its highest level in three months. Falling crude futures, which slid below $72 per barrel, also fueled the gains.</br></br>The Dow rose 96.86, or 0.9 percent, to 11,327.12, its best close since May 16. The Dow has gone up nearly 229 points in two days. The Standard & Poor's 500-stock index added 9.85, or 0.8 percent, to 1295.43, its highest level since May 11, and the Nasdaq composite index gained 34.53, or 1.6 percent, to 2149.54 for its best close since July 6.</br></br>The consumer price index, which measures price increases at the retail level, rose 0.4 percent in July, slightly higher than June's 0.2 percent increase. But with food and fuel prices removed, "core" CPI rose just 0.2 percent, less than the 0.3 percent economists expected.</br></br>Combined with Tuesday's producer price index, which showed a decline in core wholesale prices, the data point to a drop in inflation pressures. That would allow the Fed to stop raising rates, which would otherwise threaten economic growth and cramp corporate profits.</br></br>The housing market showed more signs of slowing, which could also motivate the Fed to maintain its position on rates. Housing starts fell to an annualized rate of 1.795 million in July, down from 1.85 million in June. The number of building permits issued likewise fell.