Inflation Fears Subside And Market Perks Up
Investors cheered by long-awaited good news on inflation pushed stocks higher Tuesday, hoping that a lower-than-expected increase in basic wholesale prices meant the economy will stay on a sound footing. Solid first-quarter earnings also fueled buying.</br></br>Wall Street had feared that the Labor Department's producer price index, which measures wholesale prices, would show inflation taking hold in the economy. But while the PPI rose 0.7 percent for March because of higher energy and food prices, the closely watched core PPI, without those volatile costs, grew just 0.1 percent, less than the 0.2 percent economists expected.</br></br>"We're finally seeing some numbers that point to less inflation in the pipeline," said Lincoln Anderson, chief investment officer at LPL Financial Services in Boston. "Coupled with a pretty strong earnings outlook for the quarter, this hopefully puts a floor on the market and gets things turned around again."</br></br>The Dow Jones industrial average rose 56.16, or 0.6 percent, to 10,127.41, coming off of four straight down sessions and a loss of 436 points. The Standard & Poor's 500-stock index climbed 6.80, or 0.6 percent, to 1152.78, and the Nasdaq composite index gained 19.44, or 1 percent, to 1932.36.</br></br>Worries about U.S. oil-refining capacity pushed crude futures sharply higher, keeping stock gains somewhat in check. In earnings news, an 11 percent hike in sales helped Johnson & Johnson to a strong first-quarter profit. The health care company beat Wall Street's profit expectations by 5 cents per share. Johnson & Johnson edged a penny higher, to $69.05.