Dow advances after Tuesday's huge rally

NEW YORK » Stocks made a modest advance yesterday as strong earnings from Yahoo Inc. and United Technologies Corp. helped investors briefly set aside worries over inflation and rising oil prices.

The day's gains extended Wall Street's rally from Tuesday, when stocks surged on indications that the Federal Reserve may soon end its string of interest rate hikes as the pace of economic growth appears to slow.

But while investors received another round of upbeat first-quarter earnings reports, a bigger-than-expected jump in the core consumer price index last month renewed their inflation concerns and left them wondering whether the Fed might respond by extending its program of rate increases.

Meanwhile, crude oil also topped a record $72 per barrel as gold prices climbed to a fresh 25-year high. Continued strength in commodities could soon pose an issue for inflation, said Peter Cardillo, chief strategist and market analyst for S.W. Bach & Co.

"Oil prices hold the key: We can't continue to have oil prices rise without impacting prices and economic activity," Cardillo said. "Somewhere along the line it will have a negative impact."

At the close of trading, the Dow Jones industrial average gained 10, or 0.09 percent, to 11,278.77. The Dow jumped 194.99 points Tuesday, its biggest one-day advance in a year.

Broader stock indicators also moved higher, with the Standard & Poor's 500 index adding 2.28, or 0.17 percent, to 1,309.93. The Nasdaq composite index rose 14.74, or 0.63 percent, to 2,370.88 -- a five-year high -- boosted by anticipation over earnings from Apple Computer Inc. and Intel Corp. after the bell.

The yield on the 10-year Treasury note rose to 5.03 percent as interest rate concerns weighed on bonds. The dollar gained ground against other major currencies, and gold prices marched toward $650 an ounce.

Yesterday's CPI report stunned investors following a mild reading on wholesale inflation -- seen as a precursor to consumer-level increases -- a day earlier. The Labor Department said core CPI -- excluding volatile energy and food prices -- gained 0.3 percent, versus estimates for a 0.2 percent rise. Overall CPI rose 0.4 percent after adding 0.1 percent the month before.

But solid first-quarter earnings are helping keep stocks afloat in the face of higher oil prices and interest rates, said William Lefkowitz, equities strategist for vFinance Investments. Companies' results have so far been better than forecast, which bodes well for the market and should help it ultimately move upward.