Wall Street scratched out its third straight minuscule gain Wednesday as investors fretted over rising oil prices and disappointing inventory data from the Energy Department. Analysts attributed the gain to a calming assessment of the economy by the Federal Reserve.
“We had positive economic data across the board,” said Arthur Hogan, chief market analyst at Jefferies & Co. “The headwinds are higher energy prices.”
The Dow Jones industrial average rose rose 18.80, or 0.2 percent, to 10,566.37 after modest gains Monday and Tuesday.
Broader stock indicators also rebounded. The Standard & Poor’s 500 index rose 2.67, or 0.2 percent, to 1,206.58. The Nasdaq composite index rose 5.88, or 0.3 percent, to 2,074.92.
Bonds rebounded from earlier losses. The yield on the 10-year Treasury note was 4.10 percent, down from 4.11 percent Tuesday. The dollar was lower against other major currencies. Gold prices rose.
Though retreating energy prices in past months were credited for the drop in the Labor Department’s CPI reading, the short-term surge in crude sent stock buyers fleeing. Still, with market watchers worried about interest rates and inflation still a primary concern of the Federal Reserve, the improved CPI raised hopes that the central bank will be less aggressive with its rate policy.
The Fed’s Beige Book assessment of the nation’s economy, released at midday, was also was consistent with “the Goldilocks economy,” said Alexander Paris, an economist and market analyst for Chicago-based Barrington Research. The Fed’s 12 regional banks described their area’s economic activity with such words as “moderate,” “solid” and “well sustained.”
“The broad expansion is still going on, but a little slower than it was earlier this year,” Paris said.
Analysts said the market drew some comfort from the Beige Book, enabling the major indexes to move out of negative territory and finish the day with modest gains.
Conventional wisdom is that Fed policy makers will raise rates for the ninth time when they meet at the end of the month, but investors are split on when the rate hikes, which began a year ago, will end.
Oscar Gonzalez, an economist at John Hancock Financial Services, blamed valuations for 2005’s lackluster performance, saying stocks ended last year at such high prices, the more recent good news hasn’t helped.
“If you look at the market from the beginning of the year, we are almost treading water at this point,” he said.
Decliners and advancers were even on the New York Stock Exchange. Preliminary consolidated volume was 1.83 billion shares, compared with 1.71 billion traded Tuesday.
The Russell 2000 index of smaller companies rose 2.80, or 0.4 percent, to 637.19.
Overseas, Japan’s Nikkei stock average rose 0.71 percent. In Europe, France’s CAC-40 was down 0.32 percent, Britain’s FTSE 100 shed 0.54 percent and Germany’s DAX index was down 0.94 percent.
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