Wall Street resumed its advance Friday as investors interpreted a government report of milder inflation as a signal that the Federal Reserve might consider cutting interest rates later this year. Investors were encouraged after the Labor Department's producer price index _ which measures the rate of inflation experienced by manufacturers when purchase goods _ suggested inflation is moderating. This raised hopes on Wall Street that central bankers won't need to hike interest rates to keep the economy in check, and might even lean toward lowering them, according to AP. With corporate earnings reports slowing, the market has put more weight on economic data as a catalyst for direction. The fresh batch of economic reports could help assure central bankers that they have navigated the economy toward a soft landing in which growth slows enough to restrain inflation. The stronger economic news, especially about inflation, injected a new dose of confidence that central bankers can now begin to mull a rate cut. It also helped reignite a rally stopped short Thursday after retail sales reports dimmed expectations about consumer confidence. «To some degree, the advance is in reaction to the sharp selling on Thursday,» said Richard Cripps, chief market strategist for Stifel Nicolaus. «The market was due for a blow off, and I think the data you got this morning don't get in the way of the positive trend under way. A fair amount of investors want to be in the market.» In midday trading, the Dow Jones industrial average rose 91.75, or 0.69 percent, to 13,306.88. The blue chip index gained back a majority of its 150 point loss on Thursday. It has hit 21 record closes since the start of the year and 43 since the beginning of October, its latest coming Wednesday. Broader stock indicators also advanced. The Standard & Poor's 500 index was up 11.06, or 0.74 percent, at 1,502.74, and the Nasdaq composite index rose 21.17, or 0.84 percent, to 2,554.91. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.63 percent from 4.64 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose. The Labor Department reported its producer price index rose to 0.7 percent in April. This met Wall Street expectations, and was lower than the March reading of 1.0 percent. The core PPI, which excludes food and energy, was unchanged for the second month in a row. Meanwhile, the Commerce Department said retail sales unexpectedly fell in April, indicating weakness in the economy at the start of the second quarter. Sales decreased 0.2 percent last month, after rising an upwardly revised 1.0 percent in March, according to the report. Originally, March sales were reported up 0.7 percent. The Federal Reserve on Wednesday left interest rates unchanged. Policymakers ended a campaign of 17-straight interest rate hikes in June. Also adding strength to the market was comments from former Fed Chairman Alan Greenspan, who told a business seminar Friday that the odds are two to one in favor of the U.S. avoiding a recession, according to a person who attended the event. Greenspan's comment echoes similar remarks he has made in recent months about the chance of a recession. In corporate news, American International Group Inc. rose 57 cents to $72.77 after the world's largest insurer reported first-quarter profit rose 29 percent. However, the company disclosed for the first time it would take a pretax charge from its subprime loan exposure. Chicago Mercantile Exchange Holdings Inc. sweetened its offer for CBOT Holdings Inc. by more than 16 percent on Friday, hoping to head off a still-higher counteroffer from IntercontinentalExchange Holdings Inc. Shares of the CBOT rose $5.82, or 2.9 percent, to $199.84, while its Chicago rival added $34.10, or 6.9 percent, to $532.05. IntercontinentalExchange rose $5.02, or 3.7 percent, to $139.87. Telecommunications equipment maker Alcatel-Lucent SA posted a loss of $10.8 million for the first quarter due to effects from the merger that formed the company. However, shares jumped 47 cents, or 3.6 percent, to $13.47 after it promised a strong second half. -- SPA
