Report of low inflation
encourages investors

NEW YORK » Stocks regained some momentum yesterday as fresh economic data suggested inflation remains well under control, but volatile oil prices gave investors some pause late in the session.

Analysts are closely watching stocks for signs that the market will stabilize in the second half of the year, but choppy trading has made it difficult to build confidence among investors, particularly given recent fluctuations in oil prices. Some traders questioned the durability of the day's advance on the heels of several lowered corporate forecasts and mixed economic data.

"Once again, we've pulled oil into the headlines. It seems we always find ourselves with that staring us down anytime we're starting a rally," said Bill Groenveld, head trader for vFinance Investments. "We've had a strong move, but it would be healthy for the market to consolidate. It could give us a pedestal to move higher, solidly, in the fourth quarter, as long as economic numbers don't change and oil stays in line."

The Dow Jones industrial average finished up 13.13, or 0.1 percent, at 10,244.49.

The broader gauges also closed in positive range. The Nasdaq composite index added 7.56, or 0.4 percent, to 1,904.08. The Standard & Poor's 500 index gained 3.13, or 0.3 percent, to 1,123.50.

Bond prices rose sharply after a government report indicated that inflation was in check.

The price of the benchmark 10-year Treasury note rose 3Ú4 point. Its yield, which moves in the opposite direction, fell to 4.07 percent, compared with 4.16 percent late Wednesday. The yield is now back where it was in early April.

The 2-year note rose 1Ú8 point to yield 2.40 percent, down from Wednesday's 2.48 percent.

Oil production facilities in the Gulf of Mexico were restaffing and assessing damage after Hurricane Ivan threatened rigs, tossed tankers off course and dented production earlier in the week. Crude prices were down most of the day, but inched higher late in the session as traders covered their shorts. Light crude for October delivery settled up 30 cents at $43.88 per barrel on the New York Mercantile Exchange, rebounding from below $43.

The Labor Department reported a 0.1 percent increase in the Consumer Price Index, the government's most closely watched inflation gauge. It was a better reading than the 0.2 percent rise forecast by economists, and indicates inflation poses no immediate risk. Analysts said the economic lull in late spring and early summer made it harder for some companies to raise prices.

Following a weaker session Wednesday, which analysts said was overdue after four weeks of solid gains, the inflation data was a welcome buying incentive, and more than offset negative earnings warnings from several companies. Volume was light due to Rosh Hashanah -- the Jewish New Year -- and ahead of the usually volatile "triple witching" on Friday, when options and futures contracts expire.