US stocks buoyed by rising productivity

A sharp jump in productivity, the biggest surge in two years, lifted stocks today, but early gains sputtered, leaving the market up only slightly at the close.

Investors welcomed word from the Labour Department that the nation’s productivity rose 4.7% over the summer. That helped push labour costs lower, easing fears of inflation on Wall Street.

Despite the advance, trading volume was light, leading analysts to question whether the market could climb substantially higher during the next few weeks.

“There’s still an element of the self-fulfilling prophecy here, in that you’re seeing people jump into a rally just because it’s the end of the year and we’re supposed to have a rally,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research. “I wouldn’t be surprised if we’re lollygagging around here until the end of the year.”

The market followed a pattern it has repeated many times since its October low: Gains early in the day were eroded by sharp selling before the close.

The Dow Jones industrial average rose 21.85, or 0.2%, to 10,856.86 after being up 101 points in earlier trading. The Dow lost 42.50 on Monday.

Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 1.61, or 0.13%, to 1,263.70, and the Nasdaq composite index rose 3.12, or 0.14%, to 2,260.76.