US stocks rebounded moderately on Friday as a stronger-than-expected retail sales report showed that higher oil prices aren't scaring consumers away from spending. Federal Reserve Chairman Alan Greenspan's positive comments on oil prices also encouraged investors, but the major indexes finished the week lower following sharp declines in the previous two sessions.
Wall Street has worried for months that soaring oil and gasoline prices would prompt consumers to spend less. But the Commerce Department reported that retail sales jumped 1.5 percent last month, much more than the 0.6 percent gain economists forecast.
Reassuring words from Greenspan, who said surging energy costs will have less of an impact on the economy than the energy crisis of the 1970s, cheered investors even as oil prices pushed toward US$55 per barrel. A barrel of light crude settled at US$54.93, up US$0.17, on the New York Mercantile Exchange.
"The retail sales figures were particularly good news and could have a strong impact in overall GDP [gross domestic product] growth," said Joseph McAlinden, chief investment officer at Morgan Stanley Investment Management. "And certainly Greenspan's opinion on the state of the world has helped."
The Dow Jones industrial average rose 38.93, or 0.39 percent, to 9,933.38, regaining some ground after a 153-point drop over Wednesday and Thursday.
Broader stock indicators were modestly higher. The Standard & Poor's 500 index was up 4.91, or 0.45 percent, at 1,108.20, and the technology-focused NASDAQ composite index gained 8.48, or 0.45 percent, to 1,911.50.
Despite Friday's gains, stocks ended the week lower. The sharp climb in crude oil futures weighed heavily on the markets during the week, siphoning investor enthusiasm from stocks just as third-quarter earnings season got underway. For the week, the Dow lost 1.21 percent, the S&P 500 fell 1.24 percent and the NASDAQ was down 0.44 percent.
Investors worried about inflation received good news on Friday from the US Labor Department, which said wholesale prices, as measured by the Producer Price Index, rose just 0.1 percent last month.
While the PPI was up from the 0.1 percent decline in August, the figure was small enough to reassure Wall Street that inflation would not be a major problem for the foreseeable future.
Consumers seemed to share that sentiment, as high gas prices have driven down confidence in the economy.
The University of Michigan's consumer sentiment index fell to 87.5 this month, down sharply from the 94.2 figure last month and far lower than Wall Street's expectation of 94.
Advancing issues outnumbered decliners by nearly 5 to 2 on the New York Stock Exchange, where preliminary consolidated volume came to 2.03 billion shares, compared with 1.85 billion on Thursday.
The Russell 2000 index of smaller companies was up 4.54, or 0.8 percent, at 569.42.
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