Live

Watch CBSN Live

Index Bolsters Wall Street

Wall Street finally found a reason to rally Tuesday, CBS News Correspondent Anthony Mason reports.

The U.S. Consumer Price Index numbers came out and soothed inflation fears, and at the close of trading on Wall Street, the Dow Jones industrial average was up 88.65 at 10,204.93, extending its gain of 96.57 on Monday. The index had fallen back from an earlier gain of 219 points.

"We got outta the shoot very strong, 200 points at one point," explains Ted Weisberg, Seaport Securities. "So I'd guess you'd have to say they were right where they ought to be."

While the index jumped four tenths of a percent, most of that was due to a sudden spike in gasoline and cigarette prices. The price of a pack rose 18 cents (6 percent) as cigarette companies passed on the cost of multi-billion dollar legal settlements.

Merrill Lynch economist Bruce Steinberg thinks, "The economy is showing a little bit of moderation right now. Inflation, again, it's just not there. We don't have any."

Slowed by higher interest rates and Hurricane Floyd, housing starts actually fell last month, a sign the economy is cooling off a bit.

But Wall Street has not completely recovered from last week's 600-point plunge, its worst weekly fall in a decade. "You know, we have to keep in mind here that the performance of our economy in this decade is so unprecedented, that we don't have any historical track record to look back on and to see what happens next," Steinberg says. "'Cause we're off the road map right now."

So, the stock market remains jittery. Despite the Dow's rally, almost half of all stocks actually went down. According to Weisberg, "The market internals continue to be anemic. And to me, that is the clearest message that we're not out of the woods yet."

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.