Dow eyes another record

NEW YORK (CNNMoney.com) -- An afternoon rally pushed the blue-chip Dow Jones industrial average into record territory as investors shrugged off a jump in an inflation gauge.

The Dow (up 21.96 to 12,463.23, Charts) rose modestly with less than an hour left in the session. If the Dow holds on to its gains, it'll close at a fresh record, which would make it the 21st record since October.

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The broader S&P 500 index (up 2.97 to 1,425.45, Charts) added a few points, while the tech-fueled Nasdaq composite (down 4.09 to 2,431.48, Charts) was just above breakeven.

An inflation report released before the market open rattled investors in the early going. The Labor Department's Producer Price Index, a measure of prices paid by businesses, rose sharply in November, posting its biggest gain since 1974.

But those concerns eased as investors bet the PPI reading wasn't a sign that inflation was rearing its head.

Investors aren't that concerned about it, Paul Nolte, director of investments at Hinsdale Associates, said, noting that Treasury prices barely budged on the report.

The PPI report comes on the heels of a report last week that showed prices paid by consumers remained in check last month.

Recent economic data suggests the economy is still holding strong, said Steve Goldman, market strategist at Weeden & Co. "This time of year - a few days before Christmas and before the new year - is a strong time for stock prices," he added.

Crude prices climbed nearly $1 early in the afternoon, boosting oil shares. The tremors caused by a steep sell off in Thai shares also began to ease.

Thailand's main stock market gauge, the SET, plummeted 15 percent after the country's central bank placed limits on foreign investment in an effort to curb the rise of its currency, the baht.

Major markets in Japan and Hong Kong also fell as investors were reminded of the financial crisis that struck Asia nearly a decade ago.

But after witnessing the hammering stocks took following the move, Thai authorities said the restrictions wouldn't apply to equity investments - a move that should bring some short-term calm to the market, Nolte said.

Also on the economic front, homebuilding activity rebounded in November at a pace that exceeded Wall Street's expectations but new permits sank to a nine-year low.

Builders started work on homes at an annual pace of 1.59 million in November, up from the 1.49 million rate in October. Building permits, a gauge of confidence in the market, fell to its lowest level since December 1997.

Circuit City (down $3.75 to $19.01, Charts) sank 17 percent after it posted a quarterly loss and said its holiday sales were hurt by fierce price competition from Wal-Mart. Analysts had expected the electronics retailer to report a profit.

Concerns about holiday sales spread to other retailers. Best Buy (down $0.88 to $48.46, Charts) lost 3 percent, and J.C. Penney (up $0.23 to $80.10, Charts) slipped 1 percent.

The London Stock Exchange urged shareholders to rebuff the Nasdaq Stock Market's $5.2 billion takeover bid. Nasdaq (down $1.72 to $34.27, Charts) shares skidded 5 percent.

Among tech stocks, shares of software maker Oracle (down $0.71 to $17.20, Charts) tumbled 4 percent. The company reported earnings in line with Wall Street's estimates late Monday, but some investors had expected even better results.

Morgan Stanley (Charts) edged higher after the company posted strong earnings and said it would spin off its Discovery credit card unit.

Homebuilder Hovnanian Enterprises (down $0.70 to $34.55, Charts) fell 2 percent. The company reported a loss for its latest quarter late Monday and issued a full-year outlook that fell sharply below forecasts.

U.S. crude light crude oil for January delivery soared 94 cents to settle at $63.15 a barrel on the New York Mercantile Exchange.

Gold prices jumped as COMEX gold futures soared $7.50 to $625.40 an ounce. The Amex Gold Bugs index (Charts) climbed 3 percent.

Market breadth was mixed. On the New York Stock Exchange, advancers beat decliners by a margin of 9 to 7 on volume of 1.25 billion shares. On the Nasdaq, losers topped winners by a margin of 8 to 7 as 1.65 billion shares changed hands.

Treasury prices edged lower, raising the yield on the benchmark 10-year note to 4.59 percent from 4.58 percent late Monday. Bond prices and yields move in opposite directions.

The dollar fell against the euro and drifted versus the yen.

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