Stocks close mixed amid inflation fears
NEW YORK » Stocks finished mixed yesterday after consumer prices showed a larger-than-expected increase in January and minutes from the Federal Reserve's last meeting showed the central bank considered but decided against taking a more dovish tone on the threat of inflation. The Nasdaq composite index closed at a six-year high, while the Dow Jones industrials fell.
Inflation again commanded Wall Street's attention, with the latest readings leaving some investors unnerved. The Fed minutes showed policy-makers saw economic threats spurred by the weak housing market were easing but not sufficiently to sound the all-clear on inflation.
The U.S. Labor Department's report that the consumer price index rose 0.2 percent in January came as a surprise to Wall Street, which had expected an 0.1 percent increase. Declines in energy prices didn't fully offset a rise in costs of medical care, food and airline tickets. The core figure, which excludes often volatile food and energy prices, rose a greater-than-expected 0.3 percent.
The inflation news and Fed comments followed a profit report from Hewlett-Packard Co. that dampened sentiment on Wall Street.
"We find it hard to see how the economy can continue to do well as it has without interest rates being under some upward pressure, and if interest rates do stay where they are or in fact go down it's probably because the economy will slow down," said Denis Amato, chief investment officer at Ancora Advisors.
The Dow Jones industrial average fell 48.23, or 0.38 percent, to 12,738.41.
Broader stock indicators were mixed. The Standard & Poor's 500 index fell 2.05, or 0.14 percent, to 1,457.63, and the Nasdaq composite index rose 5.38, or 0.21 percent, to its highest level in six years at 2,518.42. The previous high was 2,514.22. The Russell 2000 index of smaller companies rose 1.22, or 0.15 percent, to 827.33.
Declining issues outnumbered advancers about 6-to-5 on the New York Stock Exchange, where consolidated volume came to 2.57 billion shares, compared with 2.39 billion traded Tuesday.
Bonds fell following the inflation data; the yield on the benchmark 10-year Treasury note rose to 4.70 percent from 4.68 percent late Tuesday. The dollar was mostly lower against other major currencies, though it rose against the yen after the Bank of Japan increased interest rates. Gold prices rose sharply, rising to a level not seen since July, as oil prices increased.
Light, sweet crude settled up $1.22 at $60.07 per barrel on the New York Mercantile Exchange after a number of refinery shutdowns raised concerns about supply and as tensions increased over Iran's uranium enrichment plans.