US stocks mixed

Stocks wobbled to a mixed finish today as dramatically lower oil prices offset a US government report that offered new evidence of rising inflation.

The Labour Department’s reading of its Consumer Price Index (CPI) showed a higher-than-expected 0.4% rise for February, adding to inflation concerns raised by Federal Reserve policy-makers yesterday.

It was the last thing investors wanted to see, but the sharp drop in oil and the fact that much of the market’s inflation fear had been priced into stocks during the previous session kept stocks from posting precipitous declines, analysts said.

“Probably the most important factor today is energy,” said Arthur Hogan, chief market analyst at Jefferies & Co.

“If we had this move in the commodity in a vacuum, I think we would have a market that was up a couple hundred points. The CPI is keeping that from happening, but the good news is we’re not selling off. If we’re gonna flip-flop, I’d rather see us flip-flop to the upside.”

The Dow Jones industrial average finished down 14.49, or 0.14%, at 10,456.02, after edging in and out of positive territory for much of the day. The Dow fell 94.88 yesterday amid growing inflation concerns.

The broader gauges eked out small gains. The Standard & Poor’s 500 index closed up 0.82, or 0.07%, at 1,172.53.

The Nasdaq composite index added 0.88, or 0.045, to 1,990.22. One of the brightest spots in the market was the chip industry; the Philadelphia Semiconductor Index rose 1.16%.

Oil dropped $53.81per barrel on the New York Mercantile Exchange, as a weekly government report showed a larger than expected build in crude supplies.

Gold dropped more than $6 to $425.20, and the US dollar rose sharply against other major currencies following the Fed’s decision yesterday to raise short-term interest rates by another quarter-point to 2.75%.

Bonds were mixed, with the yield on the 10-year Treasury declining to 4.60%, from 4.63% late yesterday.

The increase in the CPI, the government’s most closely watched inflation barometer, came after prices edged up by just 0.1% in January.

Economists had forecast a 0.3% rise. Although sharp increases in energy costs – including petrol – led the way in February, many other prices, including airfares, medical care, and for education, also went up.

The “core” CPI, which excludes energy and food, rose 0.3%, its largest increase since September.

“I think the Fed got a chance to review the CPI numbers yesterday, so I think that was baked into their actions already,” said Jack Ablin, chief investment officer at Harris Private Bank.

“Still, this is the worst (CPI) report we’ve seen for six months. Core is up 2.4% year-over-year, and it’s ratcheting higher and creating concern.”

Decliners outnumbered advancing issues by about three to one on the New York Stock Exchange.

The Russell 2000 index, which tracks smaller company stocks, was down 6.52, or 1.05%, at 612.06.