Stocks Climb on Inflation Data, Falling Oil

The core consumer price index rose a mild 0.2%, while the overall index surged 0.7%

Stocks finished higher Wednesday, following a tame inflation report and a decline in oil futures. The inflation data raised hopes the Fed may be nearing the end of its tightening cycle, but upcoming figures will probably show the economy still has steam, says Standard & Poor's MarketScope.

The Dow Jones industrial average rose 68.11 points, or 0.62%, to 11,137.17, its highest closing level since June 2001. The broader Standard & Poor's 500 index bounced 9.63 points, or 0.75%, to 1,292.67. The tech-heavy Nasdaq composite index added 20.21 points, or 0.89%, to 2,283.17.

Some analysts were sounding a bullish note. "We still like the equities market and think the S&P 500 could potentially go through 1300 this week," says Henry McVey, chief U.S. investment strategist at Morgan Stanley.

Traders eyed a mixed inflation report Wednesday. The Labor Department said the overall consumer price index jumped 0.7%, while the core index rose 0.2%. The overall number was surprisingly strong, but the core figure was milder than expected, says Action Economics.

The figures followed Fed minutes Tuesday that left the door open to further data-dependent interest rate hikes. Markets will also be watching Thursday's weekly jobless claims number, expected to rise 13,000 to 310,000, says Action Economics. January durable-goods orders will be on tap Friday.

In earnings, Taser International (TASR) fell nearly 2% after its fourth-quarter earnings skidded 98%. Sprint Nextel (S) was down almost 5% on a 55% drop in profits. Medical device maker Medtronic (MDT) slipped 2% after posting third-quarter revenue of $2.77 billion, less than the mean estimate of $2.9 billion.

On the up side, Chinese search engine (BIDU) was 6% higher following better-than-expected fourth-quarter profits. Casino operator Harrah's Entertainment (HET) was slightly higher after adjusted fourth-quarter earnings topped analayst estimates. Weight-loss concern NutriSystem (NTRI) surged 13% after raising its earnings guidance for 2006.

Companies reporting earnings Thursday include Gap (GPS), H&R Block (HRB), Kohl's (KSS), Nordstrom (JWN) and Safeway (SWY).

Among other stocks in the news Wednesday, computer and software maker Sun Microsystems (SUNW) was 1% higher after naming Michael Lehman as chief financial officer to replace the retiring Steve McGowan. Software giant Microsoft (MSFT) faced a new legal complaint from rivals including IBM (IBM) and Oracle (ORCL). Computer maker Dell (DELL) postponed its April analyst meeting until September.

On the brokerage front, Intel (INTC) dropped 2% after ThinkEquity Partners downgraded the chip maker from accumulate to sell. US Airways (LCC) got a lift from peer perform to outperform by Bear Stearns.

In the automotive sector, Credit Suisse cut its recommendation on DaimlerChrysler (DCX) from overweight to neutral. General Motors (GM) was almost 1% lower a day after Moody's Investors Service pushed the Dow component's debt rating deeper into junk status. In the energy markets Wednesday, April West Texas Intermediate crude oil futures settled down $1.75 to $60.99. Thursday's weekly inventory report is expected to show supply increases, says S&P MarketScope.

European markets finished higher. In London, the Financial Times-Stock Exchange 100 index rose 14.7 points, or 0.25%, to 5,872.4. Germany's DAX index climbed 61.02 points, or 1.05%, to 5,862.06. In Paris, the CAC 40 index added 49.67 points, or 1%, to 5,041.6.

Asian markets ended mostly lower. Japan's Nikkei 225 index fell 113.16 points, or 0.71%, to 15,894.94. In Hong Kong, the Hang Seng index edged higher 8.48 points, or 0.05%, to 15,635.72. Korea's Kospi index slipped 5.91 points, or 0.44%, to 1,340.58.

Treasury Market

Prices for 10-year Treasury notes rose to 99-24/32 with a yield of 4.53%, while 30-year bonds climbed to 100-11/32 for a yield of 4.48%. The yield curve was inverted, but few voiced concerns, says S&P MarketScope.

Before it's here, it's on the Bloomberg Terminal.