Bullish data on inflation and the housing market sent stocks mostly higher Thursday, with the Dow Jones industrials and Standard & Poor's 500 index posting nearly five-year highs for the third straight session. A jump in oil prices moderated the gains, however, and the Nasdaq composite index finished lower.

Wall Street welcomed the latest report from the Labor Department, which showed consumer prices rising just 0.1 percent in February, far less than the 0.7 percent jump in January. Core CPI, with food and fuel prices removed, also rose 0.1 percent, down from 0.2 percent the previous month.

The Dow rose 43.47, or 0.39 percent, to 11,253.24, its highest close since May 22, 2001, when it finished at 11,257.24.

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Broader stock indicators were narrowly mixed. The S&P added 2.31, or 0.18 percent, to 1,305.33, its best close since May 22, 2001. The Nasdaq composite index slid 12.28, or 0.53 percent, to 2,299.56.

Combined with better-than-expected housing construction in February, investors were reassured that the economy continues to grow while inflation remains in check. That would allow the economy to withstand further interest rate increases from the Federal Reserve, which is expected to approve another quarter percentage point rate hike when it meets March 28.

"The consumer price index rise was very modest. It suggests, as I think many of us have been forecasting, that inflation is in the process of moderating," said Hugh Johnson, chairman and chief investment officer at Johnson Illington Advisors. "The good news is investors can feel somewhat more comfortable about monetary policy."

Bonds mounted another strong rally, with the yield on the 10-year Treasury note falling to 4.64 percent from 4.73 percent late Thursday. The dollar lost ground against most major currencies, while gold prices also fell.

Rising crude oil futures eroded some of the major indexes' earlier gains. A barrel of light crude settled at $63.58, up $1.41, on the New York Mercantile Exchange.

Fears of a declining housing market eased after the Commerce Department reported an annualized 2.145 million new homes under construction in February, down slightly from 2.216 million in January but a better figure than economists had expected.

First-time unemployment claims rose again, with 309,000 new jobless claims filed last week, up from 304,000 the previous week. The rising trend, while troubling to the labor market, also reassured investors that consumers' spending power would remain moderate, lowering the risk of inflation and, in turn, rate hikes from the Fed.

"Once again, we're seeing a reaction to soft economic data," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. "It seems to be the key to reducing worries about how aggressive the Fed is going to be going forward, which seems to be the catalyst for stocks here."

In corporate news, Ford Motor Co. rose 8 cents, or 1 percent, to $7.93 despite a Citigroup downgrade to "underweight" from "equal weight," or the equivalent of a "sell" rating. Citigroup said Ford was losing market share in sport utility vehicles and is seeing increased competition in pickup trucks.

Bear Stearns Cos. continued the streak of record earnings posted by Wall Street brokerage houses this week. The company's first-quarter profits beat analysts' expectations by 59 cents per share. After the session began, however, regulators announced a $250 million settlement with the company over improper mutual fund trading. Bear Stearns lost 94 cents to $133.27.

ConAgra Foods Inc. fell 91 cents to $19.50 after the food producer announced a massive restructuring plan that includes the sale of its seafood and cheese businesses and would result in unspecified one-time charges for the rest of the year. The company also cut its quarterly dividend by 34 percent.

Barnes & Noble Inc., the nation's largest bookseller, surged $4.18, or 9.7 percent, to $47.40 after it reported a 6.3 percent profit increase in its fourth quarter, beating Wall Street's expectations, and offered an earnings outlook for the current year that is higher than what Wall Street had expected.

Advancing issues outnumbered decliners by nearly 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 2.34 billion shares, compared with 2.32 billion traded Wednesday.

The Russell 2000 index of smaller companies rose 0.85, or 0.11 percent, to 743.79, an all-time high.

Overseas, Japan's Nikkei stock average tumbled 1.37 percent as investors there bid stocks lower in preparation for a possible rise in interest rates there. In Europe, Britain's FTSE 100 closed up 0.47 percent, France's CAC-40 fell 0.04 percent for the session, and Germany's DAX index slipped 0.01 percent.

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