Stocks advance following better-than-expected inflation read

NEW YORK — Stocks steamed higher Wednesday after a better-than-expected report on consumer prices tempered some of Wall Street's concerns about inflation. The Dow Jones industrial average rose more than 150 points.

The Labor Department's report that consumer prices advanced 0.2 percent in April after rising 0.3 percent in March appeared to alleviate worries about a big spike in prices due to the recent surge in energy costs. The decline in prices comes despite the largest jump in food prices in 18 years.

Wall Street has been concerned that higher food and energy costs are cutting into consumers' ability to spend. Any pullback is an unnerving prospect for investors because consumer spending accounts for about two-thirds of U.S. economic activity.

Marc Pado, U.S. market strategist for Cantor Fitzgerald, said the tame consumer prices reading, along with recent figures on productivity, indicate that businesses are swallowing some of the rising costs they face and not passing all of them to consumers. That's welcome news as consumers are facing higher prices in some key areas, like energy and food.

"You have higher input costs but you're getting more out of your workers so therefore you're able to control your output costs," he said. "The economy is lean and mean and doing well even though on the demand side it's slumping."

In midafternoon trading, the Dow rose 151.20, or 1.18 percent, to 12,983.38.

Broader stock indicators also jumped. The Standard & Poor's 500 index advanced 16.35, or 1.17 percent, to 1,419.39, and the Nasdaq composite index rose 32.80, or 1.31 percent, to 2,527.92.

Light, sweet crude oil fell $1.44 to $124.36 on the New York Mercantile Exchange.

Bond prices ticked lower as stocks advanced. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.94 percent from 3.91 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices fell.

In corporate news, Macy's Inc. reported it lost $59 million in the first quarter because of weaker sales and costs tied to combining businesses. But the results topped Wall Street's expectations and the stock rose $1.19, or 4.9 percent, to $25.25.

Deere & Co. said its fiscal second-quarter profit rose 22 percent as higher crop prices drove global demand for its farm equipment. But the company said rising costs of raw materials could eat into its profits in the coming months. Deere fell $8.03, or 8.8 percent, to $82.17.

Jack in the Box Inc. fell $2.83, or 10.1 percent, to $24.94 after the fast food chain said sales at restaurants open at least a year fell short of forecasts for the fiscal second quarter. The company lowered its sales target for the third quarter.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 635.8 million shares.

The Russell 2000 index of smaller companies rose 7.42, or 1.01 percent, to 744.27.

Overseas, Japan's Nikkei stock average rose 1.18 percent. In afternoon trading, Britain's FTSE 100 rose 0.18 percent, Germany's DAX index rose 0.33 percent, and France's CAC-40 advanced 1.09 percent.

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