NEW YORK – Stocks rose late Friday, with the Standard & Poor's 500 index and Nasdaq stretching their rally to seven straight days, as investors welcomed strong economic data and focused on the positive aspects of General Electric's (GE) solid, if uninspiring, earnings report.
The Dow Jones industrial average (search) was up 11.94 points, or 0.11 percent, to end at 10,640.83. The Standard & Poor's 500 Index (search) was up 1.42 points, or 0.12 percent, to finish at 1,227.92. The technology-laced Nasdaq Composite Index (search) was up 3.96 points, or 0.18 percent, to close at 2,156.78.
The S&P 500 closed at a new four-year high, while the Nasdaq hit a new high for 2005.
All three indexes ended the week higher for the third week in a row. The Dow was up 191.69 points, or 1.8 percent for the week. The S&P 500 gained 16.06 points, or 1.3 percent, and the Nasdaq was ahead 43.9 points, or 2 percent for the week.
Stocks rebounded late in the afternoon after being down for much of the day in a move one trader described as a short-covering rally.
"People shorted the market this morning a little bit," said Mike O'Hare, head of listed trading at Lehman Brothers, in New York. "They didn't get their downdraft and they're covering. This happens a lot in the summer time. You get these artificial rallies because of short covering. People are trying to game the market."
The government's economic reports were unabashedly positive for a second straight session. The Labor Department's (search) Producer Price Index, which measures inflation in wholesale prices, was flat in June, while "core" PPI — with food and fuel costs removed — fell 0.1 percent.
In addition, the Federal Reserve (search) reported industrial production surged 0.9 percent in June, the biggest jump in 14 months. And business inventories rose by a meager 0.1 percent in May, according to the Commerce Department, meaning that sales are brisk and businesses aren't stuck with large inventories.
But some analysts questioned the week's move higher as overdone — the Dow Jones industrials gained 1.83 percent, for example — and predicted that a selloff was imminent.
"If you look around, is this economic data really worth the jump we had?" said Bill Groenveld, head trader at vFinance Investments. "I don't think so, and that means we'll probably have to have a pullback at some point. We still have oil out there, and we still have the Fed."
Crude oil futures rose as investors worried about potential damage from Hurricane Emily to oil facilities in the Gulf of Mexico. A barrel of light crude settled at $58.09, up 29 cents, on the New York Mercantile Exchange (search).
Bonds continued the previous session's selloff, with the yield on the 10-year Treasury note rising to 4.19 percent from 4.18 percent late Thursday. The dollar fell against most major currencies, while gold prices also moved lower.
Shares of McDonald's Corp. (MCD) and Cintas Corp. (CTS) jumped after the companies reported better-than-expected earnings. Their momentum helped offset a drop in the shares of General Electric Co. (GE), which issued a third-quarter earnings forecast that lagged Wall Street's expectations
McDonald's shares rose 4.7 percent, or $1.39, to $30.99 on the New York Stock Exchange after the company posted preliminary second-quarter earnings that topped Wall Street forecasts. McDonald's provided the biggest lift to the Dow and S&P 500.
Cintas was also up, rising 10.6 percent, or $4.20, to $44 on Nasdaq a day after its quarterly profits beat expectations.
But GE, while reporting second-quarter earnings that met analysts' estimates, offered a third-quarter forecast that was lower than Wall Street had expected. Its shares slipped 0.3 percent, or 10 cents, to $35.53 on the NYSE.
Fellow Dow component Hewlett-Packard Co. (HPQ) added 32 cents to $24.94 after The Wall Street Journal and CNET's News.com reported the computer maker will undergo a major restructuring. As many as 15,000 jobs could be cut.
Vaccine maker Chiron Corp. (CHIR ) lost $1.24 to $36.03 after slashing its expected flu vaccine shipments; the company discovered tainted vaccines in a German production plant.
Trading was moderate, with 1.33 billion shares changing hands on the New York Stock Exchange, below the 1.46 billion daily average for last year. About 1.53 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.
Advancers slightly outnumbered decliners on the New York Stock Exchange and on Nasdaq.
The Russell 2000 index of smaller companies was up 0.72, or 0.11 percent, at 663.74.
Overseas, Japan's Nikkei stock average fell 0.05 percent. In Europe, Britain's FTSE 100 was down 0.55 percent, France's CAC-40 rose 0.07 percent for the session, abd Germany's DAX index gained 0.29 percent.
Reuters and the Associated Press contributed to this report.