Climbing the Worry Wall

US indices groped higher on Thursday, the 7th winning session of the last 17, dating back to the Dow's all-time closing high of 12,786.64 on February 20. And therein lies the story. Though the markets have not lately shown a preponderance of down days, the average is lower by more than 600 points in just over three weeks.

Today's slight gains were indicative of an unsure market.

Dow 12,159.68 +26.28; NASDAQ 2,378.70 +6.96; S&P 500 1,392.28 +5.11; NYSE Composite 9,005.25 +46.64

The Producer Price Index (PPI) for February increased by 1.3%, well beyond the market estimate of 0.5%. Food costs showed their largest monthly increase in more than three years. Core PPI rose 0.4 percent. The Labor Department's CPI will be released tomorrow. The reading raised more inflation concerns and speculation of a possible Fed rate increase. The FOMC of the Federal Reserve Board meets next week to decide on interest rates, though consensus opinion says the committee will keep the federal funds rate steady at 5.25% - the rate member banks pay on overnight loans from the Federal Reserve.

The FOMC last raised rates - to their current level - in June of 2006. In their five meetings since, they have made no change to the federal funds rate.

Despite the scary inflation news, investors bid up stocks, though not with great enthusiasm. With residential real estate now in a prolonged decline, capital inflows may be affected as middle to upper income investors express caution with other investments. The expected volatility tied to quadruple options expirations on Friday failed to materialize, seemingly having played itself out during Wednesday's wild ride.

Advancing issues outdid decliners by better than 2-1, and the measure of new highs to new lows flipped back to the positive, 154-88.

Crude oil continued to lose value, dipping 61 cents to $57.55. Gold and silver both notched gains; gold was up $4.60, silver added 25 cents.