Stocks Bounce Higher Despite CPI Data
By ELLEN SIMON, AP Business Writer
39 minutes ago
NEW YORK - Stocks bounced higher in early trading Wednesday despite a key inflation reading that came in above expectations and raised the prospect of another interest rate hike by the Federal Reserve.
U.S. stocks have fallen for seven of the last eight sessions on renewed inflation worries, wiping out the year's gain for every major index.
In early trading, investors looked past the Labor Department's Consumer Price Index, which posted a 0.4 percent increase in May. Core inflation, which excludes energy and food prices, rose by a larger-than-expected 0.3 percent. That brings the Consumer Price Index inflation rate for the year to 2.4 percent.
Fed Chairman Ben Bernanke and a parade of regional Fed governors have said in recent weeks that a rate of inflation above 2 percent is outside their comfort zone.
"A rate increase to 5 1/4 percent on June 29th ... seems assured," John Ryding, Bear Stearns chief U.S. economist wrote to clients.
While Japanese markets rebounded, European stocks fell in afternoon trading and were shaky elsewhere. Russia's benchmark index dropped 9.4 percent Wednesday after falling 10 percent in Tuesday's trading. Pakistan's benchmark index lost 5.86 percent and Thai stocks fell 3.54 percent, Chile's benchmark index dropped 4.37 percent.
In the first hour of trading, the Dow Jones industrial average rose 50.99, up 0.48, to 10,757.13.
Broader stock indicators also moved higher. The Standard & Poor's 500 index rose 4.59, or 0.38 percent, to 1,228.28, and the Nasdaq composite index rose 9.90, or 0.48 percent, to 2,082.37.
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