Stocks End Mixed on Further Rate Worries

Wall Street struggled to a mixed finish Friday, with the Dow Jones industrial average keeping its head above the 10,000 level while broader indexes lost ground.

A Labor Department report that consumer prices rose 0.2% last month kept some buyers away from stocks. The growing worry in the market is that the Federal Reserve will raise its key interest rate more than the quarter percentage point most analysts have predicted for the Fed’s June meeting.

Still, stocks finished above their lows for the day, led by industrial issues that could benefit from a stronger economy.

“The market has had to deal with a lot of things, from interest rates to Iraq, the election, figuring out the economic numbers,” said Kevin Caron, market strategist at Ryan, Beck & Co.

“Given all these things had to take place in a relatively short period of time, the fact that we’ve just kind of gone sideways isn’t a sign of weakness. It’s a normal sideways motion for a market that’s had to digest a lot of things.”

The Dow closed up 2.13 points, or 0.02%, at 10,012.87, after losing more than 72 points earlier in the session.

Broader stock indicators were lower. The Standard & Poor’s 500 index eased 0.74 points, or 0.1%, to 1,095.70, and the Nasdaq composite fell 21.78 points, or 1.1%, to 1,904.25.

Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange in moderate trading, but losers dominated on Nasdaq.

For the week, the Dow lost 104.47 points, or 1%; Nasdaq slipped 0.7%, and the S&P; 500 was off 0.3%. It was the third straight week of losses for all three major indexes.

While the consumer price index rose 0.2% last month, less than economists had expected, the core CPI -- excluding food and fuel costs -- rose 0.3%, which was higher than forecast.

That deepened suspicions that the Fed would soon boost interest rates to keep inflation in check.

But bonds rallied despite the inflation concerns, pushing yields lower. The yield on the benchmark 10-year Treasury note hit a 22-month high of 4.90% immediately after the Labor Department released the CPI report, but then fell to 4.77%, down from 4.85% on Thursday, as buyers stepped up.

Traders said bonds had gotten so cheap after an eight-week sell-off -- the market’s worst uninterrupted losing streak in a decade -- that some felt it was time to buy again.

“The market was very, very oversold,” said Richard Gilhooly, fixed-income market strategist at BNP Paribas Corp.

In other trading, crude oil futures continued to rise, adding 30 cents to $41.38 a barrel. The price was $39.93 a week ago.

Among Friday’s highlights:

* Heavy-industry shares rallying on economic optimism included Cummins, up $2.04 to $57.68; Ingersoll-Rand, up 39 cents to $63.07; and Caterpillar, up $1.03 to $75.69.

* Investor sentiment for Dell waned in the wake of its latest earnings report. Although the computer firm matched Wall Street estimates with a 22% increase in first-quarter profit, the company’s second-quarter outlook was worse than expected. Dell dropped $1.08 to $34.72.

* Defense contractor Raytheon was up 43 cents to $33.12 after it said it would pay $410 million to settle a lawsuit that claimed the firm misled investors about its financial troubles.

* Farmer Bros. fell $4.35, or 13%, to $28.28. The Torrance-based coffee distributor said profit fell to $5.6 million in its fiscal quarter ended March 31 from $6.3 million a year earlier, as legal and pension costs increased.

*

Market Roundup, C4