Stocks Rise on Drop in Consumer Prices

NEW YORK – Stocks rose for a second straight session Tuesday as a drop in consumer prices and a decline in crude oil futures Tuesday allowed investors to put aside worries about inflation, at least for the short term. The Dow Jones industrial average pushed past the 10,000 mark for the first time in nearly two weeks.

With gasoline prices falling to eight-month lows, the Consumer Price Index registered a small drop in July, giving consumers a respite from soaring energy prices. With consumer spending one of the main drivers of the economy, the news cheered investors who have been concerned that higher oil prices could spur inflation.

Wall Street also welcomed falling crude oil futures, which fell below the $46 mark in early trading. A barrel of light crude was quoted at $45.65, down 40 cents, on the New York Mercantile Exchange.

In the first hour of trading, the Dow rose 56.48, or 0.6 percent, to 10,011.03. The last time the Dow closed above 10,000 was Aug. 4.

Broader stock indicators were moderately higher. The Standard & Poor’s 500 index was up 6.32, or 0.6 percent, at 1,085.66, and the Nasdaq composite index gained 19.17, or 1.1 percent, to 1,802.01.

According to the Labor Department, the CPI fell 0.1 percent in July, the first drop in prices since November and a large shift from the price gains in May and June. Without food and energy costs factored in, the CPI rose 0.1 percent, less than Wall Street had forecast.

Housing construction also saw better-than-expected gains, with the Commerce Department reporting an 8.3 percent rise in home and apartment construction in July, more than making up for the 7.7 percent drop in June.

The economic data reaffirmed that, despite soaring energy costs, the overall economy remained sound and that inflation, at least for now, has been kept at bay.

A number of earnings reports from retailers also gave investors a boost. Dow component Home Depot Inc. surged $1.36 to $35.34 after the home improvement retailer reported record sales and a 19 percent hike in second quarter profits. Home Depot beat Wall Street expectations by 7 cents per share and raised its guidance for future quarters.

Office supply chain Staples Inc. saw its profits rise 39 percent in the quarter, beating expectations by 2 cents per share. Staples, which also announced new ventures in Europe and China, gained $1.57 to $29.45.

Consumer wholesaler B.J.’s Wholesale Club Inc. was up $1.11 at $24.50 after reporting a strong 25 percent rise in second-quarter profits. The company beat estimates by 5 cents per share.

J.C. Penney Co. matched Wall Street estimates, managing a small profit for the quarter after breaking even a year ago. Penney climbed 70 cents to $39.45.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 169.24 million shares, compared with 136.73 million at the same point Monday.

The Russell 2000 index of smaller companies was up 4.64, or 0.9 percent, at 532.70.

Overseas, Japan’s Nikkei stock average rose 0.4 percent. In afternoon trading, Britain’s FTSE 100 was up 0.4 percent, while Germany’s DAX and France’s CAC-40 both gained 0.8 percent.

—

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com