US stocks dip

Inflation fears pushed stocks modestly lower on Wall Street today as a surge in US wholesale prices obscured data showing signs of a moderating economic growth.

While the Labour Department’s producer price index showed high energy costs have not yet affected core wholesale prices – excluding food and energy – a stronger-than-forecast jump in overall PPI compounded concerns that soaring oil prices would inevitably drive other prices higher.

A drop in new-home construction fed hopes that economic growth was tapering and could bring an end to the Federal Reserve’s campaign to boost interest rates and contain inflation. But a strong reading on industrial activity and a fresh rise in crude oil nonetheless kept investors on edge.

“When you add up all the numbers, the economy is doing well, but there’s still a hint of inflation around,” said Larry Wachtel, a market analyst for Wachovia Securities. ”I can’t really say anything today would persuade the Fed to stop raising rates in June.”

The mixed economic numbers muddled the outlook for interest rates and countered excitement over solid earnings from Wal-Mart Stores and a rebound in bonds.

Investors were already looking ahead to tomorrow’s report on consumer prices for more clarity about the inflation picture.

The Dow Jones industrial average lost 8.88, or 0.08%, to 11,419.89.

Broader stock indicators declined. The Standard & Poor’s 500 index dropped 2.42, or 0.19%, to close at 1,292.08, and the Nasdaq composite index fell 9.39, or 0.42%, to 2,229.13.