Inflation, sales news yield mixed markets

NEW YORK - Stocks finished a volatile session mixed yesterday after a spike in wholesale prices touched off inflation concerns and partially overshadowed a strong increase in retail sales last month.

Despite the uneven economic news, an upbeat forecast from Honeywell International Inc. propped up the Dow Jones industrial average.

Wall Street, which this week has paid close attention to steps by the Federal Reserve to stoke greater movement in moribund credit markets, again looked to economic data for signals about the health of the economy.

Prices at the wholesale level jumped 3.2 percent in November - their biggest increase in 34 years - after a steep rise in wholesale gasoline prices. But the Commerce Department said retail sales rose in November by the largest amount in six months, and a Labor Department report showed a drop in new claims filed by those seeking jobless benefits.

The modest movement came as investors further examined the Fed's agreement with the European Central Bank and the central banks of England, Canada and Switzerland to combat what it described as elevated pressures in the credit markets.

The Dow rose 44.06, or 0.33 percent, to 13,517.96, after being down nearly 120 points at one point. The Standard & Poor's 500 index edged up 1.82, or 0.12 percent, to 1,488.41, while the Nasdaq composite index declined 2.65, or 0.10 percent, to 2,668.49.

The mixed economic readings came in a week already busy because of the Fed's decision Tuesday to lower interest rates for the third time this year and its announcement a day later of its liquidity plan.

A slowdown in the housing market remains a concern for Wall Street, as do spiking mortgage defaults that have made banks hesitant to lend to one another amid uncertainty about who might be holding bad debt. The Fed's actions are aimed at easing the logjam.

In corporate news, Honeywell gained after forecasting 16 percent to 21 percent growth in earnings per share for 2008. Analysts polled by Thomson Financial had been expecting a 17 percent increase. Honeywell, one of the 30 Dow components, rose $2.91, or 5.04 percent, to close at $60.65.

JetBlue Airways Corp. jumped 90 cents, or 14.40 percent, to $7.15 after German airline Deutsche Lufthansa AG said it planned to pay $300 million for a 19 percent stake in JetBlue.

The Russell 2000 index of smaller companies fell 2.25, or 0.29 percent, to 769.46.

Concerns about the effectiveness of central banks' plans to loosen the world's credit markets weighed on markets abroad. Britain's FTSE 100 fell 2.98 percent, Germany's DAX index lost 1.83 percent, and France's CAC-40 fell 2.65 percent. Japan's Nikkei stock average fell 2.48 percent.