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Stocks mixed on inflation worries

Associated Press

Conflicting signals on inflation kept stocks mixed Thursday as investors abandoned riskier stocks and moved to safer blue-chip companies. A sharp drop in oil prices helped limit Wall Street’s losses.

A surprising increase in first-time jobless claims unnerved the market but also eased fears among some investors that inflation would rise as more workers enter the job market. The Labor Department reported a jump of 17,000 claims last week, to 327,000 — the highest level in two months.

Inflation worries were bolstered, however, as the dollar fell to a nine-week low against the euro. That stole momentum from crude oil prices — another inflationary concern — which fell after Wednesday’s sharp rise. A barrel of light crude settled at $53.54, down $1.23, on the New York Mercantile exchange.

“This appears to be a fairly defensive market … while investors figure out what to do next,” said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. “I think the market is still jittery about inflation. There are no real drivers to push us solidly in any direction.”

The Dow Jones industrial average rose 45.89, or 0.42 percent, to 10,851.51.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was up 2.24, or 0.19 percent, at 1,209.25, and the Nasdaq composite index lost 1.57, or 0.08 percent, to 2,059.72.

The bond market made modest gains after a big selloff Wednesday. The yield on the 10-year Treasury note fell to 4.47 percent from Wednesday’s eight-month high of 4.53 percent.

“It’s surprising bond yields haven’t been this high beforehand, with seven interest rate hikes from the Fed,” said Michael Palazzi, managing director of equity trading at SG Cowen Securities. “There are inflationary pressures, certainly, but they’re good inflationary pressures because there’s economic growth here.”

Declining issues outnumbered advancers by about 4 to 3 on the NYSE, where preliminary consolidated volume came to 2.05 billion shares, compared with 2.22 billion on Wednesday.

The Russell 2000 index of smaller companies was down 4.14, or 0.66 percent, at 626.94.

Overseas, Japan’s Nikkei stock average fell 0.85 percent. In Europe, Britain’s FTSE 100 closed down 0.68 percent, France’s CAC-40 slid 0.7 percent for the session, and Germany’s DAX index lost 0.87 percent.

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