NEW YORK – Stocks rose modestly Thursday, giving back some gains after a late spike in oil prices offset the effect of soothing economic data suggesting inflation remains well under control.
The Dow Jones industrial average (search) ended up 13.13 points, or 0.13 percent, at 10,244.49 and the Standard & Poor's 500 Index (search) rose 3.13 points, or 0.28 percent, at 1,123.50. The Nasdaq Composite Index (search) gained 7.56 points, or 0.40 percent, at 1,904.08.
Shares of Nortel Networks Corp. (NT) fell almost 8 percent to $3.50 after a revenue warning from the telecommunications equipment company, which also compounded concerns about corporate profits.
Analysts are closely watching stocks for signs that the market will stabilize in the second half of the year, but volatile moves on news have made it difficult to build confidence among investors, particular given recent fluctuations in oil prices. Some traders questioned the durability of the day's advance following a series of lowered corporate forecasts and mixed economic data.
"Once again, we've pulled oil into the headlines. It seems we always find ourselves with that staring us down anytime we're starting a rally," said Bill Groenveld, head trader for vFinance Investments. "We've had a strong move, but it would be healthy for the market to consolidate. It could give us a pedestal to move higher, solidly, in the fourth quarter, as long as economic numbers don't change and oil stays in line."
Markets were reassured after the Labor Department (search) said the U.S. consumer price index inched up just 0.1 percent in August as gasoline anprices fell. The index without volatile food and energy prices also rose 0.1 percent, less than Wall Street had expected.
The data did not alter expectations the Fed will raise rates by a quarter of a percentage point at its meeting next Tuesday, but did encourage speculation that the central bank may go slower with its hikes later in the year.
"The CPI got the market moving up strong on all fronts but it ran out of some steam later in day as I saw the price of oil start to pick back up again," said Evan Olsen, head of equity trading at Stephens Inc.
"Clearly, oil was down earlier and now its up and that's what's really turned the market and cost us part of our gains."
NYMEX crude oil futures ended higher, reversing an earlier slide of nearly $1 as oil rig operators and refineries began resuming production as Hurricane Ivan weakened.
Some traders said the late upswing was prompted by concerns about a new storm, Hurricane Jeanne. They cited speculation that some refineries that had shut earlier may find difficulty in quickly returning to normal operations. October crude settled 30 cents higher at $43.88 a barrel on the New York Mercantile Exchange (search).
The Philadelphia Federal Reserve (search) said its business activity index dropped to 13.4 in September from 28.5 in August, signaling weakness in manufacturing in the mid-Atlantic region.
Volume was light due to Rosh Hashanah, the Jewish New Year, and ahead of the usually volatile "triple witching" on Friday, when options and futures contracts expire.
Nortel Networks shed 7.9 percent, or 30 cents, to $3.50, after the Canadian telecom equipment giant warned that revenue for the current quarter would be lower than the previous period, and full-year growth was likely to trail the industry. Regulators are investigating the company for possible accounting fraud.
Delta Air Lines Inc. (DAL) was down 9 cents at $4.01, after an independent auditor raised doubts about the carrier's financial viability, and the company revised its annual report to include the possibility of a Chapter 11 bankruptcy filing.
J.P. Morgan, which rose 1.3 percent to $39.58, and Citigroup, which climbed 0.4 percent to $47.18, are among the top syndicated loan arrangers in the U.S.
Coca-Cola Co. (KO) fell almost 3 percent a day after the world's biggest soft drink company said second-half earnings would be below estimates.
Research In Motion Ltd. (RIMM) rose more than 4 percent to $73.10. The stock touched a four-year high after the company said it will introduce the newest version of its popular BlackBerry wireless e-mail device in Europe and Australia through mobile phone company Vodafone Group Plc.
Eastman Kodak Co. (EK) rose almost 4 percent to $31.17 after the world's largest maker of photographic film announced it will close a plant in Australia, cutting about 600 jobs and causing a $105 million charge.
Trading was light, with 1.1 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.3 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.
The number of stocks that rose outnumbered those that fell by 3 to 1 on the NYSE, while the number of advancing issues outnumbered decliners by about 2 to 1 on Nasdaq.
The Russell 2000 index, which tracks smaller company stocks, was up 6.02, or 1.1 percent, at 574.54.
Overseas, Japan's Nikkei stock average finished 0.2 percent lower Thursday. In Europe, France's CAC-40 was unchanged, Britain's FTSE 100 added 0.2 percent and Germany's DAX index was up 0.6 percent.
Reuters and the Associated Press contributed to this report.