CPI Report Lifts Stocks

News at a Glance

The Lowdown

Stocks finished higher Friday on the latest reading of the Consumer Price Index. The Dow Jones Industrial Average gained 166 points at 12307. The Nasdaq picked up 50 at 2454, and the S&P 500 climbed 20 to 1360.

It was a rocky week for stocks. After a bullish Monday session, the Dow took a 206-point dive on Wednesday when sterm comment about inflation from Federal Reserve Chairman Ben Bernanke prompted fears over a potential shift in policy. However, the blue-chip index then gained 223 points over the next two sessions to close out the week, as concerns over inflation faded with new economic data and lower energy prices.

Friday's gains were widespread, with 29 out of 30 Dow components finishing in the black. Financials and materials led the market. Tech stocks performed particularly well.

Google (GOOG) shares benefited from the firm's new deal with troubled Yahoo (YHOO). Microsoft (MSFT) also posted solid gains after reportedly snubbing Yahoo's efforts at reconciliation. Intel (INTC) and IBM (IBM) also performed well.

The main market driver was the day's economic data. The CPI climbed 0.6% in May, its largest single-month increase since last November. The jump in the index was driven largely by surging energy costs; the component energy index jumped 4.4%. However, the core CPI, which leaves out food and energy prices, rose 0.2%, which was in line with economists' estimates.

Still, the consumer was rattled about paying record gas prices, even if they weren't directly affecting the prices of other goods. The Consumer Sentiment Index fell in June and came in below expectations, Reuters and the University of Michigan said.

In housing, banks repossessed more than 73,000 American homes in May, a 158% increase over the year-ago period, according to RealtyTrac. Foreclosure filings climbed 48% in May, marking the 29th consecutive month of year-over-year increases.

In energy, oil prices eased after OPEC pared its outlook for global oil demand again. Crude closed down $1.88 at $134.86 a barrel.

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