NEW YORK — Wall Street advanced Wednesday after a better-than-expected report on consumer prices tempered some of the market’s concerns about inflation.
The Labor Department’s report that consumer prices advanced 0.2 percent in April after rising 0.3 percent in March seemed to alleviate investors’ worries that a surge in energy costs would force prices across the economy to spike higher. The moderation in prices comes despite the largest jump in food prices in 18 years.
Wall Street has been concerned that higher food and energy costs are cutting into consumers’ ability to spend. Any pullback is an unnerving prospect for investors because consumer spending accounts for more than two-thirds of U.S. economic activity.
Marc Pado, U.S. market strategist for Cantor Fitzgerald, said the tame consumer-prices reading, along with recent figures on productivity, indicate that businesses are swallowing some of the rising costs they face and not passing all of them to consumers.
“You have higher input costs, but you’re getting more out of your workers so therefore you’re able to control your output costs,” he said. “The economy is lean and mean and doing well even though on the demand side it’s slumping.”
The Dow rose 66.20, 0.51 percent, to 12,898.38. A late sell-off in technology stocks caused the market to pare earlier gains, when the blue-chip index was at times up more than 150 points.
Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 5.62, 0.40 percent, to 1,408.66. The Nasdaq composite index rose 1.58, 0.06 percent, to 2,496.70.
Steve Goldman, chief market strategist at Weeden & Co., said he remains troubled about the financial industry’s underperformance amid lingering worries that the credit crisis is not over. He said that sector has been pulled higher by the market’s overall rise but isn’t taking the leadership position needed to lead a bona fide rally.
“They tend to outperform the S&P by a 50 percent margin, but we’re not seeing that at all,” he said of financials. “This has been a nice rally, but . . . we’re going to need to see them outperform in order to feel comfortable going long.”
