Stocks Mixed as Market Digests Inflation Data

Blue chips rose, lifted by sharp rises in drug makers Merck & Co. and Pfizer following favorable rulings on their pain-killing products, but technology stocks and the broader market remained under pressure Friday amid worries about higher inflation and lofty oil prices.

The Dow Jones industrial average (search) was up 30.96 points, or 0.29 percent, to end at 10,785.22. The Standard & Poor's 500 Index (search) was up just 0.84 of a point, or 0.07 percent, to finish at 1,201.59. But the Nasdaq Composite Index (search) was down 2.72 points, or 0.13 percent, to close at 2,058.62.

For the week, the Dow ended down 0.1 percent, the S&P 500 was off 0.3 percent and the Nasdaq fell 0.9 percent.

Merck (MRK) surged 13 percent while Pfizer (PFE) jumped 7 percent, helping the Dow back to a tiny gain for the year to date.

"The Dow has been helped by the drugs sector," said Evan Olsen, head of equity trading at Stephens Inc.

A Food and Drug Administration panel of experts voted by a narrow margin Friday that Merck's now-withdrawn arthritis pain killer Vioxx (search) was safe enough to be sold in the United States despite an increased risk of heart attack and stroke. Merck's stock rose $3.76 to $32.61. The FDA's advisory panel also voted 17-13, with two abstentions, to keep Pfizer's rival arthritis drugs Celebrex (search) and Bextra (search) on the market. Pfizer climbed $1.74 to $26.80.

U.S. financial markets will be closed on Monday for the Presidents Day holiday, and U.S. bond and energy markets closed early on Friday.

Worries about inflation and oil prices dogged the market during most of the session, as well as lingering concerns about higher interest rates following remarks by Federal Reserve Chairman Alan Greenspan (search) during the week.

Government economic data showed the core Producer Price Index (search) — excluding food and energy prices — rose at the fastest rate in six years in January, stoking inflation and interest-rate worries. Higher rates weigh on stocks as they can cut corporate profits and consumer spending.

"The Fed is now probably going to be more aggressive in raising interest rates," said Peter Cardillo, chief market analyst and chief strategist at SW Bach and Co. "I wouldn't a bit surprised if the interest rates are raised by 50 basis points before June."

Another setback for stocks was the higher price of oil, with NYMEX March crude settling up 81 cents at $48.35 a barrel.

As the price of oil spiked, shares of Dow component Exxon Mobil Corp. (XOM) jumped 2.2 percent, or $1.28, to $59.41. Friday, Exxon Mobil overtook General Electric Co. (GE) as the world's most valuable public company. The stock of Exxon Mobil's rival ConocoPhillips surged 2.2 percent, or $2.25, to $106.25.

A fresh round of merger news also helped investors overcome the economic data. Qwest Communications International Inc. (Q) was up 11 cents at $3.95 after the company said it would renew and possibly raise its bid for MCI Inc.(MCIP), hoping to break a $6.7 billion deal between MCI and Verizon Communications Inc. (VZ). MCI rose $1.65 to $22.31, while Verizon slipped 37 cents to $35.31.

After what appeared to be an impasse, Federated Department Stores Co. (FD) is again discussing a takeover bid for May Department Stores Co. (MAY), The Wall Street Journal reported. The two sides are getting closer on a final price-per-share, the paper said. Federated lost 65 cents to $56.72, while May added $1.93 to $33.45.

In earnings news, financial software company Intuit Inc. (INTU) said its quarterly earnings fell slightly from a year ago due to one-time losses from discontinued operations. The company nonetheless beat Wall Street profit expectations by a penny. Intuit gained 84 cents to $40.95.

Computer graphics chip maker nVidia Corp. (NVDA) climbed $2.76, or 10.82 percent, to $28.27 after seeing its quarterly profits double from a year ago thanks to new products for digital media devices and improved margins. nVidia beat analysts' forecasts by 4 cents per share.

Boeing Co. (BA), another Dow component, fell 1.6 percent, or 88 cents, to $52.78. Congressional investigators Friday ruled against Boeing in a protest by rival Lockheed Martin Corp. (LMT) over a U.S. Air Force contract to build small guided bombs, potentially worth $2.5 billion. Shares of Lockheed Martin were down 11 cents at $59.19.

In other economic news, the University of Michigan's (search) preliminary reading of its consumer confidence index for February was 94.2, off from January's final reading of 95.5. The 25 economists polled by Reuters forecast the preliminary February reading on consumer confidence at 95.5, unchanged from January. Estimates ranged from 93.5 to 96.9.

Trading was active, with 1.55 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.6 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.

Decliners outnumbered advancers on the New York Stock Exchange by about 2 to 1 and by 9 to 7 on Nasdaq.

The Russell 2000 index of smaller companies was down 1.01, or 0.16 percent, at 630.13.

Overseas, Japan's Nikkei stock average rose 0.67 percent. In Europe, Britain's FTSE 100 closed flat, France's CAC-40 climbed 0.59 percent for the session, and Germany's DAX index fell 0.23 percent.

Reuters and the Associated Press contributed to this report.