Stocks Perk Up Ahead of CPI

Bond yields and most commodities are higher, while the dollar falls.
Author:
Publish date:

Stocks drifted higher amid a revival in commodities markets Wednesday, as traders awaited news on whether rising raw-material prices are seeping into the consumer economy.

Index futures recently showed the

S&P 500

trading a point above fair value, while the Nasdaq 100 was set for a 2-point gain. The 10-year Treasury bond was down 5/32 in price to yield 5.13%, while the dollar fell against the yen and euro.

Divergent moves among yields, stocks and the dollar suggests uncertainty surrounds this morning's release of the Labor Department's consumer price index for April. One of the government's two main gauges of retail inflation, the CPI is expected to rise 0.5% on the headline number, and 0.2% among its core components.

The other major measure of consumer inflation, the core deflator for personal consumption expenditures, showed a 2% rise when it was released as part of the gross domestic product report on April 28. That's the upper border of the Fed's preferred range.

On Tuesday, a soft reading on core producer prices couldn't keep stocks aloft, as investors remained fixated on the future of

Federal Reserve

interest rate policy. For the session, the

Dow

lost 0.1% to 11,420; the S&P 500 lost 0.2% to 1292; and the

Nasdaq Composite

fell 0.4% to 2229.

Fed Chairman Ben Bernanke steered clear of economic prognosticating in a speech Tuesday night, instead warning about hedge-fund risk in financial markets. "Authorities should and will try to ensure that the lapses in risk management of 1998 do not happen again," Bernanke said, referring to the collapse of Long-Term Capital Management.

Most commodities firmed Wednesday after a two-day selloff led by gold was halted yesterday. Recently, gold was up $20.60 to $713.50 an ounce, while copper added 2.9 cents to $3.87 a pound. In electronic Nymex trading, June crude added 37 cents to $69.90 a barrel, while gasoline rose about a penny to $2.04 a gallon.

The Energy Department's weekly report on U.S. fuel inventories is expected to show a 1.6 million-barrel rise in gasoline stocks, a 400,000-barrel decline in crude stocks, and a 900,000-barrel rise in distillate inventories, according to a

Dow Jones

survey. The data hits at 10:30 a.m. EDT.

Shares of

Hewlett-Packard

(HPQ) - Get Report

rose Tuesday after the hardware giant said second-quarter earnings rose 50% to $1.45 billion, or 51 cents a share, driven by strong sales of desktop and notebook computers. Adjusted earnings of 54 cents a share were a nickel better than expected. Sales of $22.6 billion essentially matched forecasts.

Applied Materials

(AMAT) - Get Report

saw its shares ease despite a better-than-expected quarter and improved outlook. The chip equipment supplier's second-quarter earnings rose 35% from last year to $412.8 million, or 26 cents a share, beating estimates by 3 cents. This quarter, it sees earnings of 28 cents or 29 cents a share; analysts expected 27 cents a share.

Compuware's

(CPWR)

fourth-quarter profit more than doubled, reaching $56.4 million, or 15 cents a share, 2 cents better than expected. Sales at the Detroit-based IT service provider fell slightly and missed estimates.

Investors will see more earnings reports Wednesday, including results from

Salesforce.com

(CRM) - Get Report

and

Intuit

(INTU) - Get Report

.

Away from earnings,

XM Satellite

(XMSR)

could see action Wednesday after the music industry filed a copyright lawsuit over a new device that lets radio listeners store songs. XM denied the claim and said it will vigorously defend itself.

In analyst moves Wednesday, Piper Jaffray upgraded

Autodesk

(ADSK) - Get Report

to outperform, citing channel checks, while Bear Stearns lifted

Automatic Data

(ADP) - Get Report

, also to outperform.