Wall Street extended its advance Friday after reports showed inflation remained tame in November and industrial production rose for the first time in two months. The Dow Jones industrial average posted its second straight record close, and the major indexes closed the week with substantial gains.
The data underscored a sense in the market that the US economy is slowing at a reasonable pace and that inflation, a key concern of the Federal Reserve, is in check. High inflationary readings would make the Fed hesitant to lower short-term interest rates; the Fed kept rates steady at its meeting on Tuesday.
"You have a fairly benign interest rate environment which has eased the pain that oil inflicted back in the summer," said John O'Donoghue, co-head of equities at Cowen & Co. He says the emerging economic picture and merger deals have left investors feeling emboldened and will likely help send stocks higher as the end of the year nears.
The Dow rose 28.76, or 0.23 percent, to 12,445.52. The Dow eclipsed its record close of 12,416.76 set Thursday, its first in nearly a month, and set a new trading high Friday of 12,486.30. Eleven of the 30 stocks that comprise the blue chip index reached fresh 52-week highs on Friday.
Broader stock indicators also moved higher. The Standard & Poor's 500 index closed at a new six-year high, rising 1.60, or 0.11%, to 1,427.09. The Nasdaq composite index was up 3.35, or 0.14%, at 2,457.20.
Friday's gains were somewhat tepid, however, as declining issues outnumbered advancers 6 to 5 on the New York Stock Exchange. For the week, the Dow rose 1.12%, the S&P advanced 1.22% and the Nasdaq rose 0.81%.
Bonds were little changed, with the yield on the benchmark 10-year Treasury note flat at 4.60% from late Thursday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude rose 92 cents to $63.43 a barrel on the New York Mercantile Exchange.
The US Labor Department said consumer prices were flat in November rather than up 0.2% as analyst had expected. Core inflation, which excludes volatile food and energy costs, was also unchanged. Lower energy prices have helped the consumer price index for the last three months. The Fed also reported a 0.2% increase in industrial production last month, the first increase after two months of declines.
O'Donoghue said the latest economic figures only add to confidence built upon during the fourth quarter from a spate of private equity and merger deals. "You're talking about very professional people that put valuations on things. They don't buy things that they deem to be expensive," he said.
"I think there is an enormous amount of cash in the whole system," he said, predicting the run-up in stocks will continue through the end of the year before Wall Street re-evaluates conditions in the markets early next year.
In corporate news, Japan Tobacco Inc. agreed to acquire Britain's Gallaher Group PLC for about $14.7 billion. The deal would give the producer of Mild Seven cigarettes a bigger stake in the Western European market. Gallaher was down 51 cents at $89.99.
Several biotechnology companies saw big moves Friday. Immunicon Corp. soared 80 cents, or 30%, to $3.45 after the company received clearance for a breast cancer test it makes from the US Food and Drug Administration.
Genta Inc., a drug developer, fell 15 cents, or 22%, to 54 cents per share after the Food and Drug Administration rejected an application for Genasense after the leukemia drug candidate failed to meet its primary end point in a clinical trial.
Biopure Corp. fell 14 cents, or 24%, to 45 cents per share after an FDA advisory panel declared the US Navy's proposed clinical trial of the company's blood substitute too risky and recommended the study not continue.
Meanwhile, Apple Computer Inc. was down 83 cents at $87.72 after it delayed filing its annual report with the Securities and Exchange Commission due to an investigation into stock option grants. The company said it plans to restate financial statements to record charges for compensation related to past grants.
The Russell 2000 index of smaller companies was down 1.51, or 0.19%, at 792.71.
Consolidated volume on the NYSE came to 2.32b. shares compared with 2.75b. traded Thursday. Friday was a "triple-witching" day, one of the four days of the year when three types of options contracts expire. Such days usually bring higher-than-normal volume as investors jockey for new positions.
Japan's Nikkei stock average closed up 0.51%. Britain's FTSE 100 closed up 0.51%, Germany's DAX index ended up 0.55%, and France's CAC-40 rose 0.58%.
The Dow Jones industrials ended the week up 138.03, or 1.12%, to finish at 12,445.52. The S&P 500 index was up 17.25, or 1.22%, to end the week at 1,427.09. The Nasdaq rose 19.84, or 0.81%, to finish the week at 2,457.20.
The Russell 2000 index closed the week up 0.15, or 0.02%, at 792.71.
The Dow Jones Wilshire 5000 Composite Index - a free-float weighted index that measures 5,000 US based companies - ended the week at 14,356.88, up 135.00 points from last week. A year ago the index was at 12,688.71.