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World market indices advance

17 December 2009 07:46 (UTC +04:00)

Baku- APA-Economics. A benign reading on consumer inflation boosted stocks and Treasurys Wednesday as concerns eased that the Federal Reserve will be forced to raise interest rates any time soon, AP reported.
Consumer prices excluding food and energy were flat in November, signaling that inflation isn’t working its way into the economy. It was the first time that "core" inflation was unchanged after 10 monthly increases.
Meanwhile the Commerce Department said construction of homes and apartments rose 8.9 percent last month.
The reports come as Federal Reserve policymakers wrap up a two-day meeting on interest rate policy. Investors expect the Fed will hold rates near zero. The Fed’s statement following its meeting is expected at 2:15 p.m. EST.
On Tuesday, stocks fell for the first time in five days and Treasurys slipped after a jump in wholesale prices led to speculation that the Fed would have to raise interest rates sooner than expected.
Jim Herrick, director of equity trading at Baird & Co. in Milwaukee, said the latest inflation report reinforced expectations that policymakers won’t boost rates until the second half of next year.
He said the report is likely to reassure many investors that it’s OK to remain on the sidelines until the end of what has been a strong year for the market.
"Some investors have pretty much closed up their books," Herrick said. "They’re not making any new bets."
In midafternoon trading, the Dow Jones industrial average rose 24.26, or 0.2 percent, to 10,476.26.
The broader Standard & Poor’s 500 index rose 5.45, or 0.5 percent, 1,113.38. It is up 22.7 percent for the year.
The Nasdaq composite index rose 11.01, or 0.5 percent, to 2,212.06.
Bond prices rose, pushing yields lower, as inflation concerns ebbed. Rising prices eat into the returns of fixed-income investments like bonds. The yield on the benchmark 10-year Treasury note fell to 3.57 percent from 3.60 percent late Tuesday.
A drop in the dollar from a two-month high boosted commodity prices. Gold climbed, while crude oil rose $2.45 to $73.14 per barrel on the New York Mercantile Exchange.
Intel Corp. was the biggest decliner among the 30 stocks that make up the Dow industrials after the Federal Trade Commission accused the chipmaker in a lawsuit of using tactics to snuff out competition. Intel fell 35 cents, or 1.8 percent, to $19.45.
Separately, the European Union dropped antitrust charges against Microsoft Corp. after the company agreed to give users of the Windows operating system a choice of up to 12 other Web browsers. Microsoft rose 29 cents, or 1 percent, to $30.31.
Two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 622.1 million shares compared with 634 million shares traded at the same point Tuesday.
The Russell 2000 index of smaller companies rose 5.88, or 1 percent, to 612.19.
Britain’s FTSE 100 rose 0.7 percent, Germany’s DAX index jumped 1.6 percent, and France’s CAC-40 advanced 1.1 percent. Japan’s Nikkei stock average rose 0.9 percent.