Stocks rise amid erratic trading

NEW YORK » Wall Street closed an erratic session moderately higher yesterday after investors sorted through a mixed batch of data that included a rebound in New York manufacturing, signs of rising inflation and uneven first-quarter earnings. The market also had its eye on the rising price of crude oil.

Following a spate of disappointing readings on the economy, investors were pleased that the New York Federal Reserve reported regional manufacturing expanded modestly in April, after shrinking at a record clip in March.

And in a positive sign for earnings, health care products maker Johnson & Johnson said its first-quarter profit jumped 40 percent on rising sales and declining costs.

Still, the market remains anxious about inflation. As crude oil prices surged to a record $114 a barrel, and retail gasoline and diesel prices reached new highs, the Labor Department's Producer Price Index registered a much higher-than-anticipated 1.1 percent rise for March. The core index, which strips out food and energy prices, rose by 0.2 percent, as expected.

Core producer price increases have slowed over the past three months, so most investors are not too worried that inflation will keep the Federal Reserve from lowering interest rates again if the economy weakens further. However, food and energy prices keep soaring, so consumers have been paring back their discretionary spending to afford necessities -- and that is hurting some corporate profits.

"My guess is people are still really concerned about the inflation impact down the road. If oil stays where it is, it's going to be a problem," said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis.

The Dow Jones industrial average closed up 60.41, or 0.49 percent, at 12,362.47.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 6.11, or 0.46 percent, to 1,334.43, while the Nasdaq composite index added 10.22, or 0.45 percent, to 2,286.04. The Russell 2000 index of smaller companies rose 5.99, or 0.87 percent, to 692.06.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 3.49 billion shares, compared to 3.59 billion shares on Monday.

Bond prices fell in response to the inflation and manufacturing news. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.57 percent from 3.51 percent late Monday. The yield rose to 3.60 percent in after-hours trading.

Gold prices rose, while the dollar fell against other major currencies.

High oil prices are one reason Wall Street is pessimistic about the airline industry. Delta Air Lines Inc.'s and Northwest Airlines Corp.'s combination to create the world's largest carrier weighed on the stock market yesterday, with investors uneasy about the all-stock deal. Delta fell $1.46, or 14 percent, to $9.02, while Northwest fell $1.121, or 10 percent, to $10.10.

Johnson & Johnson slipped 9 cents to $65.65, but the company's earnings were a refreshing surprise for the market, RBC's Dow said. And despite everything that has happened this year with the global financial system and the economy, he added, the stock market has not fallen a full 20 percent from its highs last year, the traditional indication of a bear market.