New York – Stocks managed a moderate advance Thursday, staying afloat as signs of strength in corporate takeover activity, jobs and overseas markets allowed investors to stomach a sharp rise in wholesale inflation.
Wall Street still displayed nervousness, however, selling off briefly after former Federal Reserve Chairman Alan Greenspan rekindled investors’ worries about subprime mortgages.
The knee-jerk dip was illustrative of how jittery the markets are, recoiling when reminded that no one knows the extent to which weak areas of economy, notably the struggling housing market and hemorrhaging sub prime lenders, will hurt overall growth in the months ahead.
Trading was erratic at other points in the session, but most investors on Thursday chose to pick up bargains after a 242- point drop in the Dow Jones industrials Tuesday and a 57-point recovery Wednesday that suggested the market is holding above the index’s 12,000 mark – at least for now.
“There’s some optimism because the market had fallen quite a bit and it showed resilience yesterday, which is encouraging,” Ed Peters, chief investment officer at PanAgora Asset Management Inc. in Boston, adding that the sentiment could shift on the Consumer Price Index’s release today. “Some days the pessimists win; some days the optimists win. The market goes back and forth.”
A bidding battle for commodities exchange CBOT Holdings Inc. also gave stocks a lift. Despite the cooling economy, merger-and-acquisition activity has been surging, leading some investors to believe that problems in some sectors haven’t seeped into stronger areas.
The Dow rose 26.28, or 0.22 percent, to 12,159.68. The Dow is 627 points below its closing high of 12,786.64, reached Feb. 20.
Broader indicators were also higher. The Standard & Poor’s 500 index gained 5.11, or 0.37 percent, to 1,392.28, and the Nasdaq composite index advanced 6.96, or 0.29 percent, to 2,378.70.
Stocks briefly retreated after Greenspan said at a conference in Boca Raton, Fla., that mortgage lenders’ troubles are not yet spilling into the broader economy, but they could if home prices see another substantial decline.
There was also a short pullback in stocks ahead of the Philadelphia Fed’s manufacturing index, which showed that the region’s manufacturing growth slowed in March. Wall Street had expected activity to increase. Earlier, the New York Fed had also reported a steep deceleration in its March manufacturing growth.
