Posted on: Wednesday, April 20, 2005
Better economic news gives Wall Street a lift
By Michael J. Martinez
Associated Press
NEW YORK — Investors cheered by long-awaited good news on inflation pushed stocks higher yesterday, 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.
Worries about U.S. oil refining capacity pushed crude futures sharply higher. A barrel of light crude settled at $52.29, up $1.92, on the New York Mercantile Exchange. But the lack of a major selloff showed that Wall Street may no longer be concerned about the inflationary effects of oil.
The bond market surged, with the yield on the 10-year Treasury note falling to 4.20 percent. The dollar fell against most major currencies, while gold prices were higher.
The Federal Reserve's interest rate hikes may be starting to take their toll on the housing market. The Commerce Department said new housing construction fell 17.6 percent in March, far more than the 4.8 percent drop Wall Street expected.
Advancing issues outnumbered decliners by about 5 to 2 on the Big Board, where consolidated volume came to 2.24 billion shares, compared with 2.2 billion traded Monday.
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.
