Stocks bounded higher Wednesday as investors shrugged off a fresh indicator of rising inflation and welcomed an $11 billion deal that combines retailers Kmart Holding Corp. and Sears, Roebuck and Co. Climbing oil prices kept a lid on gains, however, in light of a potential heating oil supply crunch.
The merger, the largest such transaction involving U.S. retailers, strong data on industrial production and a jump in housing construction overshadowed a worrisome reading of the Consumer Price Index, the government’s most closely watched inflation barometer. The latest inflation data followed a sharp 1.7 percent increase in the Producer Price Index, which sent stocks falling Tuesday.
“This is a terrific rebound, and startling in the face of the twin jumps in inflation that we’ve had over the last couple of days. The market is definitely saying that inflation is not the problem right now, it’s still a question of growth,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “Mergers are bullish in general, because they show business confidence … I think the merger just backs up the economic stuff. It’s part of the same growth-in-the-economy theme.”
The Dow Jones industrial average finished up 61.92, or 0.59 percent, at 10,549.57, after surging more than 100 points earlier in the day.
The broader gauges were also higher, though they too lost some of their earlier momentum. The Standard & Poor’s 500 index rose 6.51, or 0.55 percent, to 1,181.94. The Nasdaq composite index was up 21.06, or 1.01 percent, at 2,099.68 — it’s best showing since Jan. 27.
Advancing shares outnumbered decliners by more than 2 to 1 on the New York Stock Exchange. Preliminary volume came to 1.69 billion shares, compared to 1.36 billion traded on Tuesday.
The Russell 2000 index, which tracks smaller company stocks, was up 5.08, or 0.82 percent, at 622.97.
Overseas, Japan’s Nikkei stock average shed 0.27 percent. In Europe, France’s CAC-40 rose 1.31 percent, Britain’s FTSE 100 added 0.53 percent and Germany’s DAX index surged 1.61 percent.