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Stocks Close Week Higher on QE3 Confidence

The U.S. economic news was mixed once again but a much better-than-expected read on consumer sentiment and some positive data on business inventories outweighed a spate of tepid economic reports.

The preliminary University of Michigan Consumer Sentiment Index rose to 79.2 for September from 74.3 in August. Economists were bracing for a retreat to 74. The surprise jump, which put the index at a four-month high, was attributed to Americans becoming more optimistic about the labor market and economic outlook.

The Census Bureau, meanwhile, said that business inventories rose 0.8% in July, better than the average economist prediction of a 0.3% gain and their biggest increase in six months, driven by a rise in auto stockpiles; boding well for third-quarter economic growth figures.

The Federal Reserve said industrial production fell 1.2% in August after rising 0.5% in July as Hurricane Isaac restrained output in the Gulf Coast region at the end of August and manufacturing output decreased 0.7%. Economists estimated a 0.2% decline in industrial production last month.

Capacity utilization for total industry moved down a percentage point to 78.2%.

Also, the Census Bureau said retail sales rose 0.9% in August after increasing by a downwardly revised 0.6% in July. On average, economists were expecting retail sales to gain 0.7%.

Although the headline number was quite strong, given the rebound in gasoline prices, overall, "this has to go down as a weak report," said Paul Dales, senior U.S. economist at Capital Economics. "Most of the spending in August was on products that households have to buy, such as gasoline, not items they like to buy, such as new TVs."

In addition, the Bureau of Labor Statistics announced the consumer price index for August increased 0.6% after being unchanged the prior month, driven by the jump in the gasoline component, and the core measure factoring out the food and energy components rose 0.1% for the second month in a row.

Economists expected the CPI to rise 0.5% in August and the core CPI to advance 0.2%.

In corporate news, Ford's (F) board may name CEO Alan Mulally as non-executive chairman to keep him involved with automaker after he leaves the top post, a person familiar with the matter told Reuters.

Shares gained 1.8%.

Several private-equity firms are considering a buyout offer for Staples (SPLS), according to a report from Fortune. Among the firms is Bain Capital, which helped launch the office superstore 26 years ago.

Discussions have been preliminary thus far, with sources saying the earliest an actual offer could come would be late in 2012, Fortune reported.

Shares spiked 2.1%.

Neuralstem (CUR) shares were off more than 9% after the biotech company announced the pricing of a registered direct offering of 7 million shares of its common stock at a price to the public of $1 a share.

Analogic (ALOG - Get Report) shares were popping more than 12.5% after the tech firm specializing in medical imaging and security systems reported fiscal fourth-quarter earnings that more than doubled and blew pass Wall Street estimates.

--Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.
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