US stocks: Markets gain on inflation relief, GE earnings

NEW YORK - US stocks rallied on Friday as a report on US consumer prices relieved investors' worry about inflation and strong earnings from General Electric Co. lifted optimism about corporate financial health.

Shares of Dow component GE rose almost 1 per cent to US$34.34 on the New York Stock Exchange. The company, generally considered a barometer of the US economy's strength, reported a jump in profit that matched analysts' estimates.

"GE set a nice tone," said Bill Sutherland, director of equity research at Boenning & Scattergood. "It's such a bellwether for a number of sectors." The broad Standard & Poor's 500 got a boost from UnitedHealth Group Inc., whose shares jumped 4.1 per cent to US$56.43 after the largest US health insurer reported quarterly earnings rose.

The Dow Jones industrial average ended up 70.75 points, or 0.69 per cent, at 10,287.34. The Standard & Poor's 500 Index gained 9.73 points, or 0.83 per cent, to finish at 1,186.57. The technology-laced Nasdaq Composite Index finished up 17.61 points, or 0.86 per cent, at 2,064.83.

For the week, the Dow ended down 0.04 per cent, the Nasdaq slid 1.22 per cent and the S&P 500 fell 0.78 per cent. So far this month, the S&P 500 has closed higher in only two sessions.

"We've been saying this is going to be a two-steps-forward, two-steps-backward kind of market, and it's been pretty much right on," said Michael Vogelzang, president of Boston Advisors, Inc.

The Labor Department said the US consumer price index soared 1.2 per cent in September, the biggest gain in more than 25 years. However, core CPI, which excludes food and energy costs, rose a less-than-expected 0.1 per cent.

That core inflation is up just a tenth of a per cent bodes well for the market, Sutherland said.

Pressured

Stocks have been pressured in recent weeks by expectations the Federal Reserve will keep raising interest rates to curb inflation.

The CPI number overshadowed less positive data from the University of Michigan. Its preliminary October index of consumer sentiment fell to 75.4, below the September reading and below Wall Street's median forecast.

The S&P Retail Index, meanwhile, was up 1.2 per cent after the Commerce Department said retail sales, excluding autos, rose 1.1 per cent, compared with expectations for a gain of 0.8 per cent.

Shares of economically sensitive stocks advanced, including industrial conglomerate United Technologies Corp., up 2.3 per cent, or US$1.14, at US$51.63, and defence contractor Boeing Co., up 1.5 per cent, or US$1.01, at US$67.50, both on the NYSE.

Further bolstering the broader stock market were US crude prices, with the November contract falling 45 cents to settle at US$62.63 a barrel, extending a slide since US oil futures' peak in late August.

Helping to lift the Nasdaq were shares of Adobe Systems Inc., which rose 5.8 per cent, or US$1.64, to US$29.94 a day after the maker of the Photoshop and other design software programmes said it received US regulatory approval for its planned acquisition of Macromedia Inc.

Shares of Yahoo Inc. rose 0.5 per cent, or 15 cents, to US$33.52 on the Nasdaq. The online media company is considering buying a stake in Time Warner Inc.'s America Online internet unit, a source briefed on the matter said on Friday.

Trading was heavy on the New York Stock Exchange where advancers beat decliners by almost 2 to 1. About 1.70 billion shares were traded, above the 1.46 billion daily average for last year.

On Nasdaq, gainers outnumbered decliners also by a ratio of almost 2 to 1, with about 1.56 billion shares changing hands, below the 1.81 billion daily average last year.

- REUTERS