Dow flirts with new record

NEW YORK (CNNMoney.com) -- Plunging oil prices and a mild read on inflation were among the factors propelling blue chip stocks Thursday, pushing the Dow industrials further into record territory.

However, the slide in oil and other commodities took its toll on the underlying stocks, while tech shares fought to stay positive amid discouraging news from Dell and Applied Materials.

The Dow (up 64.11 to 12,315.82, Charts) added about 0.5 percent, with 30 minutes left in the session after touching a record trading high above 12,325 before pulling back slightly. The blue-chip barometer ended the previous session at a record closing high for the 16th time since Oct. 3.

The broader S&P 500 (up 5.34 to 1,401.91, Charts) index added 0.3 percent after ending the previous session at a six-year high. The tech-fueled Nasdaq composite (up 7.16 to 2,449.91, Charts) rose 0.2 percent after ending Wednesday's session at its highest point since February 2001.

"Every day there's a new reason for the advance and so today it's oil prices breaking down to a new yearly low," said Donald Selkin, director of research at Joseph Stevens.

U.S. light crude oil for December delivery tumbled $2.50 to settle at $56.26 a barrel on the New York Mercantile Exchange, a decline of over 4 percent and its lowest point this year.

That was bad news for oil stocks, including Exxon Mobil (down $1.96 to $72.84, Charts), which declined, but was encouraging for the rest of the market.

Lower oil and gas prices means less inflationary pressure. It also means more money stays in the hands of consumers.

Selkin said that while the day's advance was positive, he remains concerned that on a short-term basis, stocks seem primed for a correction.

It was the day's read on inflation that gave investors hope for a so-called soft landing for the economy in coming months.

"The CPI report was good news for investors, in that it shows inflation pressures continue to abate," said Alan Gayle, senior investment strategist at Trusco Capital Management.

"But the market has had a strong run and has already prices in a lot of good news," he said. "So this CPI report doesn't have the same impact it used to."

The government said the Consumer Price Index, its main inflation gauge, fell 0.5 percent in October, as it did in September. Economists surveyed by Briefing.com thought it would fall 0.3 percent.

But investors focused more on the so-called "core" CPI, which excludes volatile food and energy prices, and was up just 0.1 percent, versus forecasts for a rise of 0.2 percent. Core CPI rose 0.2 percent last month.

Since bottoming in July, stocks have been rising, thanks to lower oil prices, robust quarterly earnings and an apparent end to the Fed's rate-hiking campaign. Also supporting the rally: bets the economic slowdown won't result in recession, keeping inflation in check.

Wednesday's economic news - a regional read on manufacturing and the minutes from the last Federal Reserve policy meeting - reinforced the current economic outlook. Thursday's economic news did too, including the CPI, but the market's reaction was modest.

"It doesn't mean the rally is in trouble, but near-term, we might be due for a breather," Gayle said.

Gains were pretty broad based, with 23 out of 30 Dow issues rising, including McDonald's (up $0.61 to $41.71, Charts), Altria (up $1.48 to $83.73, Charts) and Microsoft (up $0.45 to $29.57, Charts).

Dow stock Boeing (up $1.86 to $88.94, Charts) continued to advance one session after reports said the aircraft maker was poised to receive $10 billion in deals over the next few weeks.

Cisco Systems (up $0.66 to $27.26, Charts) said late Wednesday that its board has approved buying back an additional $7 billion in common stock, building on its existent buyback program. Cisco shares rose Thursday.

But other technology sector news was less positive.

Dell (down $0.70 to $25.05, Charts) said late Wednesday that it will delay filing its quarterly report until later in the month, instead of Thursday evening, as had been expected. (Full story). The stock sank about 3 percent.

Applied Materials (down $0.61 to $18.04, Charts) reported higher quarterly earnings and revenue late Wednesday that was nonetheless shy of forecasts. The company also warned that sales and earnings in the current quarter will miss forecasts. Shares slipped Thursday.

BEA Systems (down $2.64 to $13.05, Charts) slumped more than 17 percent in active Nasdaq trading after the software maker reported quarterly revenue late Wednesday that was short of forecasts.

In other news, Clear Channel (up $1.26 to $35.38, Charts) has agreed to an almost $19 billion deal to go private, while Reader's Digest (up $1.17 to $16.68, Charts) has agreed to a $2.4 billion buyout.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers by nearly nine to seven on volume of 1.40 billion shares. On the Nasdaq, decliners narrowly topped advancers as 1.76 billion shares changed hands.

A separate report showed that weekly jobless claims dipped, as expected.

Elsewhere, industrial production rose 0.2 percent in October, just short of forecasts, while capacity use rose to 82.2 percent, above expectations.

But Chicago Fed President Michael Moskow said he sees the possibility of more rate increases to cool inflation, even though economic growth is likely to be slightly below trend for the next year or so. (Full story)

The Philly Fed survey showed strength in factory activity in the Mid-Atlantic region - the index rebounded in November after contracting for the past two months, beating forecasts slightly. (Full story)

Treasury bond prices slipped, raising the yield on the benchmark 10-year note to 4.66 percent, from 4.62 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar gained versus the euro and the yen.

COMEX gold fell $2.10 to $621.70 an ounce.

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