A trifecta of good news — positive economic data, strong earnings and a sharp drop in oil prices — sent stocks sharply higher Thursday and lifted the Standard & Poor’s 500 index to a four-year high. The Nasdaq composite index also moved into positive territory for 2005.
Wall Street was encouraged by the latest reading of the Labor Department’s Consumer Price Index, which measures how much consumers pay at the retail level. The CPI was unexpectedly flat for June, while “core” CPI — with food and fuel costs removed — edged just 0.1 percent higher.
Record earnings from Apple Computer Inc. also cheered investors, while a sharp 1.7 percent jump in retail sales for June assuaged fears that high oil prices would crimp consumer spending.
“I was very pleasantly surprised by the releases today, with low inflation and very strong retail sales growth. And in general, second-quarter earnings are off to a very strong start,” said Lincoln Anderson, chief investment officer at LPL Financial Services. “This is just unalloyed good news, and no dark spots in there that I can see.”
The S&P rose 3.21, or 0.26 percent, to 1,226.50, its best showing since closing at 1,234.45 on July 3, 2001.
Other stock indicators also advanced. The Nasdaq composite index climbed 8.71, or 0.41 percent, to 2,152.82 — its best close since Dec. 31 — while the Dow Jones industrial average was up 71.50, or 0.68 percent, at 10,628.89, its highest level since March 16.
Bonds moved lower as stocks rose, with the yield on the 10-year Treasury note rising to 4.18 percent from 4.16 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
Crude oil futures dropped sharply after the International Energy Agency predicted global demand would ease. A barrel of light crude settled at $57.80, down $2.21, on the New York Mercantile Exchange.
Despite the advance, the major indexes pulled back from their session highs as investors collected profits from the past week’s run-up in stock prices. The indexes have risen between 3 percent and 4 percent over the last six trading days.
“We’re holding on, for the most part, but I think there’s been some profit-taking that’s kept us from going much higher,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “There’s a lot of excitement about what’s been happening with earnings and the economic data and oil, but we’re still hitting a little resistance.”
Nonetheless, investors received good news on nearly every point of concern. Yet the question now becomes whether the market will continue to make gains as earning season continues, or whether this is the best short-term result the market can achieve before autumn and the traditional year-end rally.
Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 1.57 billion shares, compared to 1.36 billion Wednesday.
The Russell 2000 index of smaller companies fell 4.63, or 0.69 percent, to 663.02.
Overseas, Japan’s Nikkei stock average rose 0.9 percent. In Europe, Britain’s FTSE 100 was up 0.26 percent, France’s CAC-40 gained 0.63 percent for the session, and Germany’s DAX index climbed 0.41 percent.
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