NEW YORK – Stocks finished mixed Wednesday after consumer prices showed a larger-than-expected increase in January and minutes from the Federal Reserve's last meeting showed the central bank considered but decided against taking a more dovish tone on the threat of inflation.
The Dow Jones industrial average fell 48.23, or 0.38 percent, to 12,738.41.
Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index fell 2.05, or 0.14 percent, to 1,457.63, and the Nasdaq composite index rose 5.38, or 0.21 percent, to its highest level in six years at 2,518.42. The previous high was 2,514.22.
The Nasdaq composite index closed at a six-year high, while the Dow Jones industrials fell.
Inflation again commanded Wall Street's attention, with the latest readings leaving some investors unnerved. Only last week Wall Street rallied after Federal Reserve Chairman Ben Bernanke told Congress that inflation appeared to be moderating as the economy was showing sustainable growth. The Fed minutes showed policy-makers saw economic threats spurred by the weak housing market were easing but not sufficiently to sound the all-clear on inflation.
The Labor Department's report that the consumer price index rose 0.2 percent in January came as a surprise to Wall Street, which had expected an 0.1 percent increase. Declines in energy prices didn't fully offset a rise in costs of medical care, food and airline tickets. The core figure, which excludes often-volatile food and energy prices, rose a greater-than-expected 0.3 percent.
The inflation news and Fed comments followed a profit report from Hewlett-Packard Co. that dampened sentiment on Wall Street.
"We find it hard to see how the economy can continue to do well as it has without interest rates being under some upward pressure, and if interest rates do stay where they are or in fact go down it's probably because the economy will slow down," said Denis Amato, chief investment officer at Ancora Advisors.
Bonds fell following the inflation data; the yield on the benchmark 10-year Treasury note rose to 4.70 percent from 4.68 percent late Tuesday. The dollar was mostly lower against other major currencies, though it rose against the yen after the Bank of Japan increased interest rates. Gold prices rose sharply, rising to a level not seen since July, as oil prices increased.
Light, sweet crude settled up $1.22 at $60.07 per barrel on the New York Mercantile Exchange after a number of refinery shutdowns raised concerns about supply and as tensions increased over Iran's uranium enrichment plans.
The pullback also followed five straight sessions of gains for the major indexes, a long-enough streak that investors might have welcomed a chance to take profits and give stocks a chance to consolidate gains.
Energy and materials stocks showed widespread gains as commodity prices rose, an occurrence that sometimes accompanies increased concerns about inflation. ConocoPhillips rose 71 cents to $66.29, while AK Steel Holding Corp. finished up 27 cents at $22.92.
Investors seemed unfazed by word that the Conference Board's Index of Leading Economic Indicators, which helps predict future economic activity, edged higher by 0.1 percent in January as the slumping housing and auto markets weighed on the economy. Analysts had expected an increase of 0.2 percent.
The economic readings and Fed minutes came a week after Bernanke reassured some investors by indicating inflation would likely decline slowly over two years. The comments helped propel stocks last week to their best week since mid-November. The Fed's Open Market Committee has left short-term interest rates unchanged at its last five meetings, including its Jan. 30-31 meeting. Prior to that, the Fed had raised rates 17 straight times since 2004.
"It seems unusual that we're seeing such persistence in the commodities sectors which would imply that inflation would be higher than we're assuming," said Jack Ablin, chief investment officer at Harris Private Bank.
In corporate news, Hewlett-Packard (HPQ) fell $2.03, or 4.7 percent, to $41.10 after the printer and computer maker saw inventories increase during its fiscal first quarter. Sales and profits topped Wall Street's forecasts for the quarter.
Pharmacyclics Inc. (PCYC) plunged $1.85, or 36.7 percent, to $3.19 after the pharmaceutical company said the Food and Drug Administration refused to review clinical studies of Xcytrin, an injection for treating lung cancer that has spread to the brain. The agency cited an improperly filed application, the company said.
Novastar Financial Inc. fell $7.46, or 42.5 percent, to $10.10 after the mortgage lender swung to a fourth-quarter loss from a profit as it booked charges for loans it expects borrowers with bad credit won't be able to repay. The company also said it might have to revoke its status as a real-estate investment trust, a vehicle that pays most of its taxable income to shareholders via a dividend.
FuelCell Energy Inc. rose 27 cents, or 3.6 percent, to $7.80 after the maker of fuel cell power equipment expanded a manufacturing agreement with Posco Power, the largest privately controlled power producer in South Korea.
Declining issues outnumbered advancers about 6-to-5 on the New York Stock Exchange, where volume came to 1.43 billion shares, compared with 1.33 billion traded Tuesday.
The Russell 2000 index of smaller companies rose 1.22, or 0.15 percent, to 827.33.
Overseas, Japan's Nikkei stock average closed down 0.14 percent. Britain's FTSE 100 closed down 0.86 percent, Germany's DAX index fell 0.59 percent, and France's CAC-40 was down 0.33 percent.