Markets & Finance

Dow Hits Another Record as Inflation Falls


The CPI fell 0.5% in October, while core CPI edged up 0.1%. Meanwhile, Clear Channel and Reader's Digest each agreed to buyout offers

Stocks finished modestly higher Thursday, as the Dow reached its 17th all-time closing high in 33 trading sessions. A friendly inflation report was in focus, alongside buyout news and a steep decline in oil prices.

On Thursday, the Dow Jones industrial average rose 54.11 points, or 0.44%, to 12,305.82, a new closing record, after touching a new intraday high of 12,325.91. The broader Standard & Poor's 500 index added 3.19 points, or 0.23%, to 1,399.76. The tech-heavy Nasdaq composite was up 6.31 points, or 0.26%, to 2,449.06.

NYSE breadth was positive, with 18 issues advancing for every 15 declining. Nasdaq breadth was flat.

Investors were weighing consumer inflation data Thursday. The consumer price index (CPI) fell 0.5% in October, a bigger drop than expected. The core CPI, which excludes food and energy, edged up 0.1%.

While encouraging to the markets, the news might not be enough to set the Federal Reserve at ease over inflation. "Between this and the PPI that came out earlier in the week, it really has the bond traders convinced that the inflation that the Fed's worrying about really isn't an issue," says TJ Marta, fixed-income strategist at RBC Capital Markets. "At the same time, I'm not sure this data is soft enough for the Fed to put down its inflation-fighting mantle."

Separately, the Philadelphia Fed index of regional manufacturing activity rose to 5.1 in November, in line with expectations, after two straight monthly declines.

In other economic data, the National Association of Home Builders' home market index advanced to 33 in November from 31 in October. Initial jobless claims fell 2,000 to 308,000 for the week ended Nov. 11. Industrial production rose 0.2% in October after a 0.6% decline in September. The calendar Friday holds October housing starts.

On the company side, Dell (DELL) was lower after the computer maker delayed its third-quarter earnings report because the SEC has turned a 15-month-old accounting probe into a formal investigation.

Deal news was also in focus. Radio station owner Clear Channel Entertainment (CCU) said it has agreed to be taken private for about $18.7 billion by a consortium led by investment firms Thomas H. Lee Partners and Bain Capital Partners.

Meanwhile, publisher Reader's Digest Association (RDA) agreed to be bought by an investment group headed by private equity firm Ripplewood Holdings for $1.61 billion in cash.

Shareholders of HCA (HCA) voted to approve taking the hospital chain private in a $21.3 billion leveraged buyout.

On the earnings front, Sears Holdings (SHLD) was lower after the retailer said third-quarter income tripled but sales fell 3%.

Shares of Barnes & Noble (BKS) dipped after the bookseller reported a $2.7 million loss in the third quarter.

Elsewhere, JetBlue Airways (JBLU) was lower after UBS cut its rating on the stock from neutral to reduce.

In the energy markets, December West Texas Intermediate crude futures fell $2.50 to $56.26 a barrel after an inventory report showed an increase in natural gas supplies.

European markets finished mixed. In London, the FTSE-100 index rose 25.1 points, or 0.4%, to 6,254.9. Germany's DAX index added 14.18 points, or 0.22%, to 6,445.07. In Paris, the CAC 40 index was down 5.81 points, or 0.11%, to 5,505.72.

Asian markets ended mixed. In Japan, the Nikkei 225 index lost 79.6 points, or 0.49%, to 16,163.87. In Hong Kong, the Hang Seng index gained 61.07 points, or 0.32%, to 19,154.07. Korea's Kospi index slipped 1.79 points, or 0.13%, to 1,410.75.

Treasury Market

Treasury yields ticked higher on hawkish comments from Fed officials, after sinking initially on the benign CPI reading. The 10-year note fell in price to 99-24/32 for a yield of 4.66%, while the 30-year bond dropped to 96-08/32 for a yield of 4.74%.

Hogan is a reporter for BusinessWeek.com in New York.

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