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Stocks rise moderately on benign inflation data

Stock prices rise after report shows inflation is in check

Stocks opened moderately higher Friday as benign inflation data counter-balanced a downtick in consumer confidence.

As of 8 a.m. Pacific time, the Dow Jones industrial average had risen 40.98 points, or 0.2%, to 16,775.17.

The Standard & Poor's 500 index was up 5.75 points, or 0.3%, to 1,935.86.

Still, share prices appear to be headed for their first weekly decline in four weeks after falling each of the last two days.

Stocks advanced Friday after a report showed that inflationary pressures remain in check, suggesting that stagnant wages are offsetting recent improvement in the job market.

Wholesale prices fell 0.2% last month and are up a modest 2% in the last 12 months, according to a Labor Department report. Economists had expected a 0.1% increase in May.

It’s unclear, however, whether prices will remain subdued if the turmoil in Iraq escalates. The clash between militants and the government has pushed crude-oil prices higher in recent days.

“Consumers should brace for some additional wallet-withdrawals in doing their weekly errands as higher gasoline prices will probably join higher food prices very shortly,” Michael Montgomery, an economist at IHS Global Insight, wrote in a report Friday morning.

Consumer confidence already is showing a bit of wariness. Sentiment fell to a three-month low after unexpectedly slipping in June, according to a Thomson Reuters/University of Michigan index.

Even as the economy has added jobs at a decent clip in recent months, recent data, such as sluggish retail sales, suggest that growth is choppy.

Follow Walter Hamilton on Twitter: @LATwalter

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