Stocks Up, but So Are Jitters Over Inflation

Stocks rebounded on Thursday from Wednesday’s slide, but shrinking volume left many analysts unimpressed--and worried about more potential selling ahead.

In other markets, key commodity prices continued to rise, boosting inflation jitters ahead of the April wholesale inflation report due out today.

On Wall Street, the Nasdaq composite gained 114.85 points, or 3.4%, to 3,499.58, recovering about 58% of Wednesday’s 200.28-point drop.

The Dow industrials added 178.19 points, or 1.7%, to 10,545.97, after sliding 168.97 points on Wednesday.

Winners topped losers by 5 to 3 on Nasdaq and by nearly 2 to 1 on the New York Stock Exchange, but Nasdaq trading volume dwindled to 1.37 billion shares from 1.58 billion on Wednesday.

In other words, the rebound appeared to have less conviction than Wednesday’s sell-off.

“We had a really rough start to the week,” noted Bob Dickey, analyst at Dain Rauscher Wessels. “So at this point, calling this an oversold bounce is about as bullish as we can get.”

So far this week the Nasdaq index is down 8.3%. Still, the index’s bounce on Thursday kept it above the low reached in the April 14 market collapse.

Intel led the tech sector, up $9.50 to $115.56 after diving $10.06 on Wednesday, when the company said a recall of faulty circuit boards could cost it a significant sum.

Also rebounding were Apple, up $3.50 to $102.81, and Oracle, up $4.75 to $72.38, among others

But gains in other major tech issues were limited. Cisco Systems added $1.75 to $60.25. And Sun Microsystems fell $1 to $76.81.

Applied Materials added just 63 cents to $85.25 despite a strong earnings report late Wednesday. But that price was up from after-hours trading of $76.50 on Wednesday.

News that overall retail sales fell in April took some pressure off the bond market, where yields have been climbing on worries that the Federal Reserve, which meets Tuesday, will raise its key short-term interest rate by half a point, to 6.5%--and signal more to come.

“It appears that the volatile stock market and higher interest rates have started to slow consumer spending,” said Stan Shipley, economist at Merrill Lynch.

Although bond yields were largely unchanged on Thursday, traders are eager to see today’s April inflation report. A larger-than-expected jump in prices could mean the Fed will get more aggressive in boosting rates.

In futures trading, oil and natural gas prices rose again on Thursday, helping to lift the Commodity Research Bureau/Bridge index of 17 major commodities to a new two-year high, up 0.8% to 220.57.

With commodities and interest rates continuing to rise, many analysts say the stock market will have a tough time getting anything going in the near term.

Wall Street’s woes are dragging down Asian markets: Tokyo’s Nikkei-225 index slumped 4.6% to 16,882.46 on Thursday, its lowest close in 7 1/2 months.

But many European markets weren’t fazed: The German market rose 2% and the French market gained 1.9%.

Among Thursday’s highlights:

* The Internet sector rebounded, led by Lycos, up $8.63 to $54 after Lloyds TSB said it signed an agreement with the online content provider’s European division to give customers free Internet access.

Other winners included EBay, up $6.75 to $117.75; Go2Net.com, up $9.63 to $45.63; and Infospace, up $2.94 to $48.75.

* Many telecom-related shares jumped, including Motorola, which regained $5.44 to $92.19 after diving $17.75 on Wednesday on an analyst’s downgrade. Also up Thursday were ADC Telecom, up $5.63 to $59.13; Nokia, up $2.88 to $52.13; and JDS Uniphase, up $6.31 to $86.50.

* Some of the most concerted buying of recent weeks has been in energy shares, and that continued on Thursday. Chevron gained $2.50 to $93.38, Amerada Hess rose $2.06 to $67.31 and Kerr McGee jumped $3 to $55.88.

* Waste Management soared 26% a day after North America’s largest trash hauler reported first-quarter earnings that beat analysts’ estimates. The long-depressed stock zoomed $3.94 to $18.94.

* Among Southland issues, Total Renal Care surged $1.38 to $4.13 after reporting quarterly earnings of 5 cents a share, well above the 1 cent expected.

Market Roundup, C7-C8