Wall Street rallied Friday on signs of slowing inflation, completing the stock market’s best week in a month.
The Dow Jones industrial average added 33.38 points, to 11,560.77. The Standard & Poor’s 500 index rose 3.59, to 1319.87. The Nasdaq composite index gained 6.86, to 2235.59.
Stocks climbed this week as oil prices tumbled and investors became more convinced that the Federal Reserve won’t raise its target interest rate when it meets next week.
For the week, the Dow increased 1.5 percent, the S&P 500 added 1.6 percent, and the Nasdaq climbed 3.2 percent. For the S&P 500 and the Nasdaq, it marked the biggest gain since the week ended Aug. 18.
Consumer prices rose in August by half the pace of the previous month, a government report said, reducing the chances the Federal Reserve will resume raising interest rates when it meets next week.
“Inflation appears to be decelerating,” said Alan Gayle, senior investment strategist at Trusco Capital Management in Richmond, Va. “Some of the risks that have been in the market are gradually clearing away. We view this as encouraging.”
Kansas City Fed President Thomas Hoenig said in a speech that Friday’s inflation numbers are “good news” and the Fed’s past rate increases are “still playing out” in the economy.
“If inflation is no longer a concern, the outlook for the consumer is bright,” said Philip Tasho, chief investment officer at Tamro Capital Partners LLC. “The markets may rally further if we see some positive signs that consumer sentiment is changing.”
Microsoft jumped to its highest level since April after an analyst said its Vista operating system might go on sale earlier than forecast. The stock added 52 cents, or 2 percent, to $26.85 for the third-biggest advance in the Dow. The shares could reach $33 in the next 12 months, up from a previous forecast of $30, Goldman, Sachs & Co. analyst Rick Sherlund wrote.
United Technologies, maker of Pratt & Whitney jet engines and Carrier air conditioners, led the Dow higher after increasing its stock buyback. Shares rose $1.61, or 2.6 percent, to $64.61.
Adobe Systems, the world’s biggest graphic-design software company, jumped $3.35, to $37. The stock’s 10 percent jump was the largest in the S&P 500. The company issued a strong sales and profit outlook.
Ford slid $1.07, or 11.8 percent, to $8.02, its biggest decline since December 2002. The automaker accelerated job cuts and plant closings and projected that its North American auto business would remain unprofitable until at least 2009.
