Week ends with solid gains

NEW YORK – Wall Street extended its rebound to a third session Friday, ending with a moderate advance after personal consumption data bolstered the outlook for the economy and interest rates. The major indexes finished the week with solid gains.

Investors were upbeat about a Commerce Department report that income and spending rose in April, helped along by improved wages that kept consumers buying at stores. The change in core prices – excluding energy costs – also tailed off slightly to advance 0.2 percent last month.

But while the annual inflation rate edged up to 2.1 percent to sit just outside of the Federal Reserve’s targeted range, signs of easing demand in this week’s data showed the economy is headed for a more manageable rate of expansion. That suggests the inflationary pressures are not as bad as feared, and that the Fed might not need to raise rates further, said Michael Strauss, chief economist of Commonfund.

The Dow Jones industrial average jumped 67.56, or 0.6 percent, to 11,278.61. The Dow gained 180 points since Tuesday. Broader stock indicators were also higher. The Standard & Poor’s 500 index rose 7.28, or 0.57 percent, to 1,280.16; the Nasdaq composite index added 12.13, or 0.55 percent, to 2,210.37, returning to positive territory for the year.

Wall Street finally showed signs of strength after an inflation scare sent stocks racing downward over the past two weeks, slashed 5 percent from the Dow and turned the Nasdaq negative for 2006. Although stocks were sharply oversold, investors still appeared tentative about buying while they remained uncertain about the economy.

Mild economic data this week helped them regain some faith in stocks and bonds, giving the major indexes their first weekly advance after two weeks of losses. For the week, the Dow rose 1.21 percent, the S&P 500 gained 1.04 percent and the Nasdaq jumped 0.75 percent. The Russell 2000 index rose 0.55 percent to 729.55.