The tug of war between a slowly deflating housing bubble, underlying economic strength and inflation will be showcased in key economic reports on Thursday. Based on Thursday's data alone, it would be tempting to bet that, thanks to a slowing housing market and tame inflation pressures, the Federal Reserve will soon stop raising interest rates. Construction is expected to have started on 2.030 million new homes in February, down 11% from 2.276 million in January, according to a Reuters survey. At the same time, the consumer price index is expected to have risen 0.1% in February, slower than its 0.7% increase in January. Excluding food and energy, the core CPI is seen rising 0.2%, matching January's gain. In another key report, jobless claims are expected to have increased 298,000 in the latest week, slightly down from 303,000 the previous week, but slightly above the four-week average of 294,000. Combined with signs of weakness in retail sales in February, these reports would bode well for those hoping that the Fed will soon end its 20-month long campaign of monetary tightening. Such hopes were on display Wednesday, reflected in strength in stocks following the release of the Fed's beige book report, which said the economy continued to expand at a healthy clip in the first two months of the year, while cost pressures were little changed. Stocks took off after the report, boosting both the Dow Jones Industrial Average and the S&P 500 to their highest finishes since May 2001. The Dow rose 58.43 points, or 0.5%, to 11,209.77. Blue chips were helped by DuPont ( DD), which lifted its first-quarter guidance. General Motors ( GM) also advanced amid reports of a bid for its financing arm GMAC. The S&P 500 gained 0.4% to 1303. The Nasdaq Composite advanced 0.7% to 2311, moving higher despite a big drop in tech leaders Apple ( AAPL) and Google ( GOOG).