Market Gets a Boost From Inflation Data

Updated from 9:48 a.m. EDT

Stocks in the U.S. were tracking higher early Wednesday amid cooler-than-expected inflationary data and results at Freddie Mac ( FRE) that weren't nearly as bad as analysts had predicted.

The Dow Jones Industrial Average was climbing 99 points to 12,931, and the S&P 500 was adding 11 points to 1414. The Nasdaq Composite tacked on 23 points to 2518.

The action came after the Labor Department said that, despite a 0.9% jump in food costs -- the biggest advance in nearly two decades -- April consumer prices rose only 0.2% from the prior month. Economists had been looking for a 0.3% uptick. The core consumer price index, which excludes food and energy, rose 0.1%, or half of the expected increase.

Energy prices, the government said, were unchanged from March. Year over year, core consumer inflation was up 2.3%, a hair lower than anticipated, while the overall CPI climbed 3.9% from a year ago.

In less upbeat economic data, RealtyTrac said that foreclosures reached 243,353 in April, which the report noted will add pressure to housing prices that are already dismally low. The report said areas of California, Florida, Nevada and Arizona continue to be "particularly hard-hit."

On the equities side, Freddie Mac said its first-quarter loss narrowed to $151 million, or 66 cents a share, from a $3.97 shortfall in the fourth quarter -- far better than the average Street projection of 93 cents a share, as per Thomson Reuters. The loss is also nearly double than that of last year, and the company plans to raise $5.5 billion "in the near future," but the stock still ramped up 8.9%. Fellow government-sponsored mortgage buyer Fannie Mae ( FNM) was ahead by 5.1%.

Elsewhere in the financial space, Bloomberg reported that JPMorgan Chase ( JPM) could fire 4,000 of its own workers as the brokerage combines its operations with Bear Stearns ( BSC) and deals with the blustery investment-banking environment, according to a person familiar with the matter.

Roughly 2,000 employees would be replaced by Bear-derived newcomers, said the report. JPMorgan shares were up a penny at $45.49 lately.

Department-store chain Macy's ( M), meanwhile, posted a surprise adjusted profit of 2 cents a share and reiterated its bullish full-year earnings forecast. When counting in substantial one-time restructuring and litigation charges, the company swung to a quarterly loss, but the stock still moved up 5.9%.

Elsewhere, chipmaking-equipment seller Applied Materials ( AMAT) said earnings dwindled by 26% last quarter, though the company beat on both top and bottom lines. Also, in a conference call, CEO Mike Splinter predicted more softness in chip-related spending while also offering his prediction that "this is the bottom." Shares were off 0.5% following some choppy action.

Electronic Arts ( ERTS), a video-game publisher, offered a weaker full-year profit outlook than that targeted by Wall Street. The company also came in well ahead of expectations for the fiscal fourth quarter with adjusted earnings of $30 million, or 9 cents a share, on 50% higher sales. Still, shares shed 2.8%.

Away from the tech patch, Whole Foods ( WFMI) plunged 12.4% after the organic-foods mart said costs from its Wild Oats buyout ate into its fiscal second-quarter profit, which slid 13%, even as revenue soared by 27.6%. Same-store sales, or those from locations open a year or more, climbed 6.7%.

Also, Deere & Co.'s ( DE) fiscal second-quarter income, which surged amid strong demand for the company's farm equipment, came in just short of consensus. The tractor maker also said that rising commodity prices will probably drag on its results for the rest of the year. Shares slumped 9.2%

Late in the trading day Tuesday, Clear Channel Communications ( CCU) reached a buyout settlement with Thomas H. Lee Partners and Bain Capital worth $36 a share, or $17.9 billion. That's $3.20 a share lower than what the companies had previously agreed on, but shares closed Tuesday higher and added 1.5% in the new session.

Among commodities, crude oil sank 80 cents to $125 a barrel as the Energy Information Administration reported that crude stockpiles rose by 200,000 barrels last week. Gold futures gave up $1.50 to $868.10 an ounce. The U.S. dollar gained 0.2% against the euro to $1.5454, while firming by 0.4% against the yen at 105.22.

Still, Treasury prices were clawing their way up from early losses. The 10-year note was up 1/32 in price to yield 3.91% and the 30-year bond added 16/32 in price, yielding 4.61%.

Markets abroad were mostly on the rise. In Asia, Hong Kong's Hang Seng Index slipped 0.1% overnight, but the Nikkei 225 in Tokyo climbed 1.2%. As for Europe, London's FTSE 100 and Germany's Xetra Dax each gained roughly 0.5%. The Paris Cac was jumping 1.3%.

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