Flat Inflation Kicks Wall Street into Gear

U.S. stocks rose Friday, pushing the Dow industrials to a record as tame consumer prices reassured investors inflation was under control and economic growth was still strong enough to support corporate profits.

The Dow Jones industrial average was up 28.76 points, or 0.23 percent, to end at 12,445.52. The Standard & Poor's 500 Index was up 1.60 points, or 0.11 percent, to finish at 1,427.09. The Nasdaq Composite Index was up 3.35 points, or 0.14 percent, to close at 2,457.20.

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Sliding energy shares, however, braked the market's advance after investors took profits in the sector after several days of sharp gains.

The November report on the U.S. Consumer Price Index relieved worries the Federal Reserve might have to resume raising interest rates to keep inflation in check and perpetuated the view the economy may slow at a moderate pace and avoid recession.

One of the stocks most closely tied to the economic outlook, General Electric Co. (GE), shot up 3.2 percent, or $1.15, to $37.36 on the New York Stock Exchange. GE gave the biggest boost to both the Dow and the S&P 500 as momentum carried it through technical levels, pushing the stock to a two-year high at $37.51.

"The report showed consumer prices were unchanged and that is a good thing. People think the Fed is done raising rates and that we will have solid growth in the first and second quarters," an outlook that helped the stock market, said Anthony Conroy, head trader with BNY Brokerage, a unit of Bank of New York.

For the week, the Dow industrials finished up 1.1 percent, the S&P 500 rose 1.2 percent and the Nasdaq advanced 0.8 percent.

Investors earlier pushed the Dow to an intraday record high of 12,486.30 after more robust earnings reports, particularly from technology companies, underpinned the increasingly favorable sentiment about the U.S. economy.

The S&P 500 climbed to a 6-year high at 1,431.63, while the Nasdaq reached an intraday peak at 2,470.02, its best level since February 2001.

Friday marked the quarterly expiration and settlement of four different types of December futures and options contracts — a convergence known as quadruple witching. The event stirred up volatility and added volume as investors spruce up their portfolios for the year or exercise derivative positions.

Shares of Adobe Systems Inc. (ADBE) gained 4.9 percent, or $2.00, to $42.81 on the Nasdaq after the design software maker late Thursday reported higher profits and a first-quarter outlook in line with Wall Street forecasts.

Adobe contributed the most to the Nasdaq 100's advance.

However, slipping energy stocks curbed some of the markets' gains, traders said.

Oil shares fell, and the Chicago Board Options Exchange's Oil Index declined nearly 1 percent, falling back from the lifetime high reached the day before. The index surged to the fresh record Thursday as shares of major components, including Exxon Mobil Corp., rose to their highest levels ever.

On Friday, Exxon (XOM) was down 1.8 percent, or $1.43, at $77.30 on the NYSE.

Shares of Honeywell International Inc. (HON) gained 2.2 percent, or 93 cents, to $43.62 and ranked as the Dow's second-biggest advancer. Honeywell's products range from cockpit electronics to temperature-management systems for buildings.

Shares of Citigroup (C) rose 1.8 percent a day after the No. 1 U.S. bank said it expects its investment spending next year to rise by less than half the increase in 2006. Citigroup's stock, up 96 cents at $54.07 on the NYSE, was the second-biggest contributor to the S&P 500's rise.

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