NEW YORK (AP) — Wall Street surged again yesterday, launching the Dow Jones Industrial Average to its best two-day advance since last July after data showed that wholesale inflation, excluding energy and food costs, is rising at a gentle pace.
The market was unfazed by the Labor Department’s headline Producer Price Index (PPI), which rose 0.9 percent in May because of surging gasoline prices — a bigger increase than in April and higher than economists predicted. Investors instead were pleased that the core PPI, which strips out often-volatile food and energy costs, posted a small 0.2 percent rise, as expected, after a flat reading in April.
The yield on the 10-year Treasury note edged up yesterday to 5.23 percent from 5.21 percent late Wednesday, but stayed well below the peak of 5.295 percent reached Tuesday. With Treasury yields appearing stable, the market is more at ease with the idea that the Fed probably won’t lower rates this year, said Jay Suskind of Ryan Beck & Co.
“Now perhaps the glass is being seen as half full,” Mr. Suskind said. “If the reason for higher interest rates is growth, well, at the end of the day, that’s what grows corporate earnings.”
The Dow rose 71.38, or 0.53 percent, to 13,553.73. The Dow has risen 258 points over the past two sessions, logging its largest two-day point gain since July.
The Standard & Poor’s 500 Index advanced 7.30, or 0.48 percent, to 1,522.97, and the Nasdaq Composite Index climbed 17.10, or 0.66 percent, to 2,599.41. The Russell 2000 Index of smaller companies climbed 4.58, or 0.55 percent, to 837.12.
The dollar rose against other major currencies, and gold prices also climbed.
Crude oil prices jumped $1.39 to $67.65 a barrel on the New York Mercantile Exchange, buoying oil company stocks. ExxonMobil, Chevron and ConocoPhillips all rose more than 1 percent.
In other economic data, the Labor Department said jobless claims totaled 311,000 last week, unchanged from the previous week and a better result than the market expected.
“The aggregate of all the statistics of the last month, except those related to home building, has pointed to a stronger economy,” said John Merrill of Tanglewood Capital Management.
Mr. Merrill added that although high yields are seen as unfavorable because they slow down corporate dealmaking, it’s important to note that the 10-year Treasury yield’s jump in the past two weeks has helped long-term yields exceed short-term yields. In the past several months, short-term yields were flat with or higher than long-term yields — an unusual pattern that implies the economy is headed for a slowdown or recession. A return to normalcy in the bond market is a positive sign that the economy is on the upswing.
Takeover activity appears to be chugging along, despite the recent rise in rates. Chicago Mercantile Exchange Holdings yesterday offered to pay a special dividend of $485 million to CBOT Holdings shareholders in addition to its $10.19 billion takeover offer. CBOT, parent of the Chicago Board of Trade, gained $3.31 to $204.81, and CME fell $3.76 to $547.49.
Meanwhile, investment bank Goldman Sachs said second-quarter earnings rose on investment banking revenue, but a slowdown in its mortgage business capped profits. The stock dipped $7.89, or 3.4 percent, to $225.75.
Bear Stearns Cos. reported weaker-than-expected second-quarter earnings, also citing mortgage lending troubles. The stock rose 11 cents to $149.60.
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