Dow Rises Above World Turmoil
Stocks posted their best showing in nearly two weeks Friday as encouraging signs on U.S. inflation offered a rare distraction from the blare of the world’s political and financial uncertainty.
The Dow Jones industrial average rose 84.72 to 7,572.48, trimming the week’s loss to just 8.84.
Broad-market indicators also rallied late in the day, led by the Nasdaq composite index, whose bellwether technology shares extended Thursday’s rebound from a five-session losing streak.
As has almost become customary, the session began with a half-hearted rally. Investors, worried that big American companies such as the Dow 30 will be hurt by economic instability in Asia and Latin America, used the early strength to take some money off the table. The Dow, for example, surrendered an early 50 point gain and slipped to a 20 point loss before the afternoon rally.
The advance was particularly encouraging, analysts said, because it came before a weekend full of question marks about the latest U.S.-Iraqi standoff and the unfolding financial crisis around the world.
“Investors are taking a second look here and the conclusion now seems to be more favorable - that Iraqi tensions are not going to be a major threat to our market, and that the worst elements of the (Asia) situation are already (discounted) in our market,” said Eugene Peroni, director of technical research at Janney Montgomery Scott in Philadelphia.
With key markets such as Hong Kong and Brazil rebounding sharply on Friday, Wall Street shrugged off a worsening backdrop in Japan, where the stock market sank to another 2-1/2-year low amid disappointment with Tokyo’s plan to jump start the sputtering Japanese economy.
U.S. stocks also drew a boost on Friday from reports showing that inflation at the wholesale level nearly disappeared in October while retail sales slumped, suggesting that demand may be easing enough to help contain inflation.
Analysts said the data points to a long-awaited slowdown that might allow the Federal Reserve to indefinitely postpone an inflationfighting boost in interest rates. Some economists, however, cautioned that the retail slowdown could lead to conditions more severe than a dose of moderation in the economy.
“The unexpected decline in retail sales tells us that the economy is not growing too fast. In fact, it’s slowing,” said Sung Won Sohn, chief economist at Minneapolis-based Norwest Corp.
Advancing issues outnumbered decliners by a 2-to-1 margin on the New York Stock Exchange, where volume totaled a heavy 634.78 million shares as of 4 p.m., down slightly from 642.34 million on Thursday.
Overseas, Tokyo’s Nikkei stock index fell 2.2 percent, extending that measure’s loss to 11.5 percent in less than three weeks. But among other markets battered in the recent turmoil, share prices surged 8.2 percent in Brazil and 2.4 percent in Hong Kong. In Europe, Frankfurt’s DAX index and London’s FT-SE 100 both rose 0.7 percent.