Modest inflation report lifts stocks

A broad rally drove U.S. stocks solidly higher Thursday for the second day in a row, extending the market’s gains for the week.

Technology companies, which have led the market this year, contributed the most to the rally. Healthcare stocks and banks also accounted for a big slice of the market’s gains as investors sized up the latest company earnings and economic news. Crude oil prices rebounded after an early slide.

The S&P 500 index rose 25.28 points, or 0.9%, to 2,723.07. The Dow Jones industrial average climbed 196.99 points, or 0.8%, to 24,739.53. The gain turned the Dow back to positive for the year. The Nasdaq composite index added 65.07 points, or 0.9%, to 7,404.97.

Smaller-company stocks continued to post solid gains. The Russell 2000 index picked up 7.66 points, or 0.5%, to 1,603.71. That’s the highest close for the index since January.

The Labor Department said that U.S. consumer prices rose a modest 0.2% in April, a sign that broader inflation pressure remains muted. Excluding the volatile food and energy categories, core prices ticked up just 0.1% from March and 2.1% from April 2017.

Slower growth in core prices may mean that the Federal Reserve will be less inclined to accelerate interest rate increases. The Fed has signaled that it will lift rates twice more this year, after a boost in March. Some expect that an uptick in inflation or economic growth might spur the Fed to add a third additional hike, for a total of four this year.

“It tells us that rates are going to continue to go higher, but maybe it starts to call into question: Are we really going to have four? Maybe three is enough,” said Bob Doll, chief equity strategist at Nuveen Asset Management.

Bond investors appeared to interpret the consumer prices data as a sign that the Fed is not likely to speed up the pace of its planned rate increases. Bond prices rose, pulling the yield on the 10year Treasury note down to 2.96% from 3% late Wednesday.

Technology stocks extended their gains. The sector, which is up 11.1% this year, is ahead of all others.

On Thursday, Qualcomm led the sector, climbing 3.4% to $54.97 after the company’s board approved a $10-billion share buyback.

Envision Healthcare was the biggest gainer among healthcare stocks. The company added 5% to $42.74.

CenturyLink jumped 7.5% to $19.40 after the telecom company reported earnings much higher than topped analysts expected.

Benchmark U.S. crude oil rose 22 cents to $71.36 a barrel in New York. Brent crude, used to price international oils, gained 26 cents to $77.47 a barrel.

The dollar fell to 109.37 yen from 109.72 yen on Wednesday. The euro strengthened to $1.1927 from $1.1861.

Gold rose $9.30 to $1,322.30 an ounce. Silver gained 22 cents to $16.76 an ounce. Copper picked up 5 cents to $3.11 a pound.