Inflation Report Lifts Stocks

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The Lowdown

Stocks finished higher Wednesday after traders welcomed a better-than-expected reading of the Consumer Price Index, suggesting inflation moderated last month. The Dow Jones Industrial Average climbed 66 points to 12898. The Nasdaq picked up 2 at 2497, and the S&P 500 rose 6 to 1409.

The CPI rose 0.2% in April, a bit below economists' estimates, as energy prices remained flat but food prices surged. The core number, which leaves out those factors, ticked up 0.1%.

The inflation update came as a relief to traders, who have watched oil prices soar over the last six weeks and struggled to handicap their effect on the broader economy.

Still, stocks ended the day with a whimper. Financial and techs pulled back off their session highs during the last two hours of trading. Consumer cyclicals and transportation stocks led the market.

The energy sector gave back early gains as oil prices fell below $124 a barrel. By 4:10 p.m., crude traded down $2.23 on the day at $123.87. Separately, Congress voted to stop adding oil to the government's Strategic Petroleum Reserve, effectively lifting supply by 70,000 barrels a day. Congressmen acknowledged the bill's effect on prices would be minimal.

In housing, the number of April foreclosure filings jumped 65% over the year-ago period, according to RealtyTrac. In the U.S., 243,353 homes received at least one default notice, auction sale notification or bank repossession document in the last month. During that period, foreclosure filings rose in 42 states.

Meanwhile, the Mortgage Bankers Association's weekly index of mortgage applications rose for the second straight week, as more people looked to refinance their home loans at lower interest rates. The MBA's specific index of refinancing applications is up 14.5% over the year-ago period.

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