NEW YORK — Wall Street surged again today, launching the Dow Jones industrial average to its best two-day advance since last July after data showed that wholesale inflation, excluding energy and food costs, is rising at a gentle pace.

The market was unfazed by the Labor Department's headline producer price index, which rose 0.9 percent in May due to surging gasoline prices — a bigger increase than in April and higher than economists predicted. Investors instead were pleased that the core PPI, which strips out often-volatile food and energy costs, posted a small 0.2 percent rise, as expected, after a flat reading in April.

If core inflation is under control, the Federal Reserve is unlikely to lift interest rates, a possibility that started dogging the market last week, when the yield on the benchmark 10-year Treasury note passed 5 percent for the first time since last summer.

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Gas-price spike rubs off on wholesale inflation

WASHINGTON — The biggest jump in gasoline prices in six months helped push inflation at the wholesale level higher in May, although inflation outside of energy remained well-behaved.

Wholesale prices rose by 0.9 percent last month, worse than the 0.6 percent advance analysts expected, the Labor Department reported today. The price surge was led by a 10.2 percent jump in gasoline prices, the biggest one-month increase since last November.

However, food prices declined for the first time in seven months and, outside the volatile food and energy sectors, core inflation posted a moderate 0.2 percent increase. That was slightly better than the 0.3 percent advance analysts had anticipated.

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Domestic crude oil closes above $67 per barrel

NEW YORK — Domestic crude oil closed above $67 a barrel today for the first time since September on continuing concerns that the refining industry is not producing enough gasoline to meet summer driving demand.

That worry, which drove gas prices at the pump to record levels last month, was exacerbated by Wednesday's government report that showed refinery utilization fell last week, and that gasoline inventories did not grow.

Much of today's advance was driven by technical buying by large hedge funds triggered by Wednesday's report, said Jack Hunter, an energy trader at FC Stone Group in Kansas City.

Light, sweet crude for July delivery rose $1.39 to settle at $67.65 a barrel on the New York Mercantile Exchange. That was the front month contract's highest close since Sept. 5, when it settled at $68.60.

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Adobe profit up 24% in second quarter

SAN FRANCISCO — Adobe Systems Inc. reported a 24 percent surge in second-quarter profit today, setting a record in revenue and exceeding Wall Street expectations as the software company embarked on its biggest-ever product launch.

Net income for the three months ending June 1 was $152.5 million, or 25 cents a share, up from $123.1 million, or 20 cents a share, in the same quarter of last year.

Second-quarter sales were a record $745.6 million, up 17 percent from $635.5 million in the second quarter of 2006, the previous overall record.

Excluding costs for expenses, such as restructuring charges related to the December 2005 acquisition of Macromedia Inc., profit was $223.2 million, or 37 cents per share, compared with $189.4 million, or 31 cents per share, in the year-ago quarter.

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Bid rises for Chicago Board of Trade

CHICAGO — The parent of the Chicago Mercantile Exchange raised its bid for the crosstown Board of Trade for the second time today, hoping to trump the rival ICE exchange for good as a vote nears on whether to create an all-Chicago powerhouse in the global derivatives industry.

Three days after winning approval from federal regulators on the proposed acquisition, Chicago Mercantile Exchange Holdings Inc. moved to seal it by offering shareholders of CBOT Holdings Inc. $485 million on top of the $10.2 billion already proposed.

They also promised Board of Trade members, many of whom will vote on the deal as shareholders of parent CBOT, at least $250,000 each as part of a related legal dispute over their trading rights at an affiliated exchange.

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Fake Colgate tubes recalled

WASHINGTON — The Colgate-Palmolive Co. said today that 5-ounce tubes of counterfeit toothpaste sold in discount stores in four states under a Colgate label are being recalled because they may contain a poisonous chemical.

A Food and Drug Administration official, Doug Arbesfeld, said Wednesday that testing had found the chemical in a product with the Colgate label, but said in the initial announcement that the FDA was unsure whether it really was Colgate or a counterfeit.

MS USA Trading, Inc. of North Bergen, N.J., the importer involved in the initial recall announcement said the toothpaste may contain diethylene glycol, a chemical found in antifreeze.

The company said the toothpaste, imported from South Africa, was sold in discount stores in New Jersey, New York, Pennsylvania and Maryland.

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Banks: mounting home-loan defaults affected profit

NEW YORK — Wall Street investment banks Goldman Sachs Group Inc. and Bear Stearns Cos. today said fiscal second-quarter profit was squeezed by the nation's mounting home-loan defaults.

Both investment banks, among the world's largest underwriters of bonds that back mortgage loans, said the shakeout in the subprime sector continued to erode performance. The industry has suffered this year as delinquencies on U.S. loans to homebuyers with poor credit have risen to a four-year high.

Bear Stearns said its profit slid 10 percent, while Goldman mustered only a 1 percent increase. Top executives at both investment houses indicated subprime woes aren't spilling into other areas of the mortgage industry, but that the worst may still lay ahead.

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Unemployment claims remain about same

WASHINGTON — Applications for unemployment benefits totaled 311,000 last week, unchanged from the previous week, the Labor Department reported today.

The fact that claims remained at the same level was better than the small increase analysts had been expecting and supported their view that the job market has held up remarkably well in the face of a yearlong economic slowdown.

Claims have fallen in six of the past nine weeks. Those declines followed a period of rising claims which had raised fears that the slowing economy was starting to trigger higher layoffs.

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Ford: 27,000 U.S. workers agreed to leave

DEARBORN, Mich. — About 27,000 U.S. hourly workers have left Ford Motor Co. under buyout or early retirement offers, the automaker said today.

Ford offered the packages last year to reduce its work force to match lower demand for its cars and trucks.

Initially about 37,000 workers signed up for the offers, but not all have left the company, it said. Ford has until September to phase in the departures as it closes plants under a restructuring plan, and some of the workers could change their minds and stay with the company.

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Late mortgage payments, foreclosures reach new highs

WASHINGTON — Late payments and new foreclosures on adjustable-rate home mortgages made to people with spotty credit climbed to all-time highs in the first three months of the year.

The Mortgage Bankers Association, in its latest snapshot of the mortgage market, reported today that the percentage of payments that were 30 or more days past due for "subprime" adjustable-rate home mortgages jumped to 15.75 percent in the January-to-March quarter.

That was a sizable increase from the late 2006 delinquency rate of 14.44 percent and was the highest on record, the association's chief economist Doug Duncan said in an interview with The Associated Press.

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Freddie Mac reports $211 million loss in first quarter

WASHINGTON — Freddie Mac, the nation's second largest buyer and guarantor of home mortgages, reported a first-quarter loss of $211 million amid turbulence in the market and erosion in the value of financial instruments it uses to hedge against interest-rate swings.

The government-sponsored company, which is emerging from an accounting scandal, said today it lost 46 cents a share for the three months ended March 31. That contrasted with a profit of $2 billion, or $2.80 a share, in the same period a year ago.

It was Freddie Mac's first regular quarterly report in five years.

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Rising numbers for Dow, S&P, crude, more

The Dow rose 71.37, or 0.53 percent, to 13,553.72.

The Standard & Poor's 500 index advanced 7.30, or 0.48 percent, to 1,522.97, and the Nasdaq composite index climbed 17.10, or 0.66 percent, to 2,599.41.

Light, sweet crude for July delivery rose $1.39 to settle at $67.65 a barrel on the New York Mercantile Exchange.

Gasoline futures for July jumped 6.94 cents to settle at $2.2247, also on the Nymex.

The July Brent crude contract rose $1.02 to settle at $70.96 on the ICE Futures exchange in London.