By Donna Kardos Yesalavich
NEW YORK (MarketWatch) -- U.S. stocks rose Friday morning
following comments from Federal Reserve Chairman Ben Bernanke and
data showing flat inflation that boosted expectations for the
central bank to provide more stimulus.
The Dow Jones Industrial Average (DJI) rose 33 points, or 0.3%,
to 11129, in early trading. Alcoa (AA) was the measure's best
performer, up 1.1%, while DuPont (DD) rose 0.8% and Hewlett-Packard
(HPQ) climbed 0.8%.
However, General Electric (G) sank to the bottom of the Dow, off
3.2%, following the conglomerate's third-quarter earnings report.
GE's revenue came in short of Wall Street's view, which the company
blamed on lower equipment sales and the impact of reduced assets at
GE Capital.
The Nasdaq Composite (RIXF) added 1% to 2460, boosted by a 10%
jump in Google (GOOG). The Internet-search giant reported a 32%
rise in third-quarter profit, beating Wall Street estimates. The
company's report provided evidence that several key emerging
businesses have grown faster than Wall Street expected.
The Standard & Poor's 500 index (SPX) rose 0.5% to 1180,
with its technology sector in the lead.
The stock gains coincided with a decline in the dollar as
investors continued to price in expectations for the Fed to unveil
more stimulus measures to prop up the weak economy. Bernanke made a
case Friday morning for new steps by the Fed to boost economic
growth, saying inflation was running below the Fed's objective of
2% and that the economy was on a course to grow too slowly to bring
down unemployment.
Investors were immediately reminded about the low inflation
shortly after Bernanke's speech as data from the Labor Department
showed the seasonally adjusted consumer price index for September
rose by 0.1% from August while the underlying inflation rate, which
is more closely watched by the Fed, was unchanged in September.
Those core consumer prices, which strip out volatile energy and
food costs, were also flat in August. Economists had expected
consumer prices to climb by 0.2% and the core CPI to rise by 0.1%
in September.
Bernanke's comments and the inflation data came as the Fed is
considering whether to restart a program of purchasing long-term
Treasury bonds to push down long-term interest rates and boost
growth. It next meets Nov. 2-3, and investors expect the Fed to
proceed with such a plan at the meeting, a view Bernanke did little
to counter.
Among other data released Friday, retail sales and New York
manufacturing activity improved more than expected. U.S. retail
sales rose for a third consecutive month in September, posting a
stronger-than-expected increase that should fend off fears of a
double-dip recession but doesn't signal a strong recovery. The
Empire State's business conditions index jumped to 15.73 in October
from 4.14 in September and 7.10 in August. Economists had expected
a reading of just 6.0 in October.
The U.S. Dollar Index (DX), reflecting the U.S. currency against
a basket of six others, slipped 0.1%. Treasurys were mixed, with
the two-year slightly higher, pushing its yield down to 0.35%,
while the 10-year fell, lifting its yield to 2.54%. Crude-oil
futures and gold futures declined.
Among stocks in focus, Mattel (MAT) fell 7.9%. The toy maker's
third-quarter profit got a boost from merchandise tied to the
animated blockbuster movie "Toy Story 3," which, combined with cost
cuts and a tax benefit, allowed the nation's largest toy maker by
revenue to beat analysts' estimates. However, investors were
disappointed by a 5% drop in sales at the Fisher-Price division
from a year earlier.