Stocks slip on inflation report

NEW YORK (CNNMoney.com) -- Stocks were sluggish Friday morning after a report that showed a big jump in prices paid by consumers gave investors more reason to think the Federal Reserve will not continue its rate cutting campaign.

The Dow Jones industrial average (INDU) and the broader S&P 500 (INX) index both lost around 0.3 percent about 90 minutes into the session. The tech-fueled Nasdaq (COMPX) composite inched higher.

The Consumer Price Index (CPI) jumped 0.8 percent in November, the biggest monthly jump in more than two years. CPI topped forecasts and was up from the 0.3 percent reading in October.

It was the second day in a row that the government released reports showing higher inflationary pressures, following Wednesday's Producer Price Index (PPI).

The two reports raised worries that the Federal Reserve won't be able to keep cutting interest rates, as it did earlier this week, if pricing pressures are rising.

The Fed has cut interest rates three times this fall as a means of loosening up the tight credit market and stopping the crisis from causing the economy to fall into a recession. Earlier this week, the central bank said it was teaming with other central banks to make it easier for banks to borrow.

In other Fed news, the central bank said Friday that industrial production rose 0.3 percent last month after having fallen a sharp 0.7 percent in October. The increase was slightly more than expected.

In corporate news, Citigroup said late Thursday that it would jump in to save seven structured investment vehicles (SIVs) that have been hit hard by the credit market crisis, taking the funds' $49 billion of assets onto its balance sheets. Citi (C, Fortune 500) shares rose Friday morning, erasing early losses.

But other big Dow stocks fell, including IBM (IBM, Fortune 500), Intel (INTC, Fortune 500), Home Depot (HD, Fortune 500) and Alcoa (AA, Fortune 500).

Shares of power tools maker Black & Decker (BDK, Fortune 500) were down nearly 8 percent in early trading after the company lowered its fourth-quarter earnings estimate because of slowing sales and product recalls.

But a number of big technology stocks rose, giving the Nasdaq a lift. Microsoft (MSFT, Fortune 500) and Cisco (CSCO, Fortune 500) were among the gainers.

Evergreen Solar (ESLR) was up more than 12 percent in active Nasdaq trade after UBS Investment Research upgraded the solar cell maker on strong growth potential.

Market breadth was negative. On the New York Stock Exchange, losers topped winners nine to five on volume of 340 million shares. On the Nasdaq, decliners beat advancers four to three on volume of 625 million shares.

Treasury prices were slightly lower, raising the yield on the 10-year note to 4.23 percent from 4.20 percent late Thursday. Treasury prices and yields move in opposite directions.

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

U.S. light crude oil for January delivery fell 50 cents to $91.75 a barrel on the New York Mercantile Exchange.

COMEX gold for February delivery fell $8 to $801 an ounce.