Stocks Ease Ahead of CPI

The consumer inflation gauge is expected to show a 0.1% rise.
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Stocks eased from nearly five-year highs Thursday as traders awaited a key reading on consumer inflation.

Index futures showed the

S&P 500

trading 2 points below fair value, while the Nasdaq 100 was set for a 3-point decline. The 10-year Treasury bond was down 2/32 in price to yield 4.74%, while the dollar rose against the yen and euro.

Blue chips staged another solid advance Wednesday, pushing the S&P 500 and

Dow Jones Industrial Average

to their best levels since May 2001. Optimistic commentary in the

Federal Reserve's

beige book report and bullish earnings news helped drive the rally.

Traders trying to handicap Fed policy over the next several months will see the consumer price index Thursday. The inflation gauge is expected to show a 0.1% rise in February after jumping 0.7% in January. The core rate should rise 0.2%. Another report is expected to show that building began on an annualized 2.03 million new homes last month, down 11% from January.

Atlanta Fed President Jack Guynn spoke positively on the economy late Wednesday. "I continue to think the most likely path for the economy is sustained GDP growth with inflation and inflation expectations contained within acceptable bounds," he reportedly said. "But I, like others, will be watching very carefully as events unfold."

Brokerage earnings have been a bullish catalyst all week following stellar quarters at

Goldman Sachs

(GS) - Get Report

and

Lehman Brothers

(LEH)

. On Thursday,

Bear Stearns

(BSC)

is expected to say it earned $2.95 a share in the first quarter on revenue of $2.05 billion.

Elsewhere Thursday, a report says

Google

(GOOG) - Get Report

plans to launch a service that would standardize a way for traditional retailers to build an online presence. The Interned company is expected to test Google Base, a comparison shopping service that could eventually extend into real estate, the

Financial Times

says.

Two specialty retailers traded moderately higher late Wednesday after reporting decent quarterly earnings.

Hot Topic

(HOTT)

said profits fell 39% from a year ago but beat estimates by 2 cents, excluding a charge.

Zumiez

(ZUMZ) - Get Report

posted a 59% rise in quarterly income, guided higher for 2006 and split its stock, 2-for-1.

In early ratings move, Merrill upgraded

Qualcomm

(QCOM) - Get Report

to buy from hold, J.P. Morgan cut

Ford

(F) - Get Report

to underweight, and Kaufman initiated

Broadcom

with a buy.