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Good inflation news gives stocks a lift

Dow rises 24.04; NASDAQ, Standard & Poor’s also gain

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NEW YORK — Investors brushed aside a landmark ruling against the tobacco industry Friday, pushing stock prices higher after new government data showed inflationary pressures remain under control.

The Dow Jones industrial average closed up 24.04 at 10,812.75.

Blue-chip stocks fell into negative territory late in the session after a Florida jury ordered the cigarette industry to pay a record $145 billion in damages to Florida smokers. But the Dow Jones index ended higher after a late wave of buying.

Broader stock indicators were also higher. The NASDAQ composite index was up 71.32 at 4,246.18 and the Standard & Poor's 500 index was up 14.14 at 1,509.98.

Trading volume was down as many investors stayed on the sidelines ahead of a slew of second-quarter earnings reports expected next week. Friday's market focused mainly on three new reports that provided more evidence of a slowing economy.

The Labor Department reported that the Producer Price Index, which measures inflation pressures before they reach consumers, rose 0.6 percent in June. While that gain was bigger than expected, it mostly was due to a sharp rise in energy costs.

But the core rate of inflation at the wholesale level, which doesn't include energy or food costs, fell an unexpected 0.1 percent in June, the best showing since January.

In another report, retail sales rose by a slightly bigger-than-expected 0.5 percent in June, but excluding the volatile automobile category, sales rose just 0.2 percent, weaker than expectations.

In a third report, industrial production at the nation's factories, mines and utilities rose an expected 0.2 percent in June, the slowest pace since September.

The three reports showed that the Federal Reserve's six interest-rate hikes over the past year were cooling off the economy's pace and keeping inflation under control. That helped ease investors' fears that the Fed will raise rates again this year.

"Earnings are fine, inflation is fine, the world is in good shape, but people are still a little nervous about the stock market," said Alfred E. Goldman, director of market analysis at A.G. Edwards & Sons Inc. in St. Louis. "We had a very tough spring, and that forced many people to be cautious."

Tobacco stocks were down modestly across the board. Philip Morris was down 31.25 cents to $24.688. RJ Reynolds closed down 93.75 cents to $26.188. And Loews Corp., parent of Lorillard Tobacco, was down 43.75 cents to $63.063.

But the positive economic news helped push banking and financial stocks higher. J.P. Morgan, which reported strong earnings on Thursday, gained $4.563 to $128.688, while Citigroup rose $1.375 to $68.

Merck came under some selling pressure, falling $1.875 after a federal advisory panel told the Food and Drug Administration that the company's Mevacor is a safe and effective treatment to reduce high cholesterol, but it shouldn't be sold without a prescription.

Technology stocks led the NASDAQ again, with Amazon.com gaining $7.50 to $42.50 after an analyst said the Internet retailer isn't in danger of running out of cash.

Semiconductor shares were mixed, with Altera Corp. gaining $8.437 to $119.50 after reporting better-than-expected earnings, while PMC-Sierra dropped $10.375 to $218.563.

Advancing issues outnumbered decliners by a 7-to-6 margin on the New York Stock Exchange.

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