(Updates to midday, changes byline)
* April CPI rises less than expected
* Freddie Mac quarterly loss is less than feared
* Home builders, financial stocks gain
By Cal Mankowski
NEW YORK, May 14 (Reuters) - U.S. stocks rose on Wednesday
after government data showed that consumer prices rose less
than expected in April, taking pressure off the Federal
Reserve to raise interest rates.
Shares of financial companies, home builders and
retailers, all seen as likely to benefit from steady to lower
borrowing costs, advanced.
Stronger-than-expected results from department store
operator Macy's Inc <M.N> and a smaller-than-expected loss
from home finance company Freddie Mac <FRE.N> also buoyed
sentiment.
"The big news is that the CPI, both overall and core, were
better than expected," said Al Goldman, chief market
strategist at Wachovia Securities in St. Louis. "That
dispelled a lot of concern by people who were afraid that
inflation was going to run wild and the Fed would have to jack
up interest rates."
Goldman said it has been his view that rising interest
rates were not imminent, partly because of the Fed's
reluctance to increase borrowing costs in the period leading
up to an election.
The Dow Jones industrial average <> climbed 110.49
115.86 points, or 0.86 percent, to 12,942.67. The Standard &
Poor's 500 Index <.SPX> gained 11.85 points, or 0.84 percent,
to 1,414.89. The Nasdaq Composite Index <> rose 23.53
points, or 0.94 percent, to 2,518.65.
A pullback in crude oil prices also helped shares of big
manufacturers such as 3M Co <MMM.N>, whose stock was among the
Dow's top advancers.
3M shares gained 1.5 percent to $78.32 on the New York
Stock Exchange.
U.S. crude <CLc1> was down 40 cents at $125.40 a barrel on
the New York Mercantile Exchange, a day after it approached a
record just 2 cents shy of $127 a barrel.
The S&P retail index <.RLX> was up 2.1 percent.
Shares of Macy's rose 5.4 percent to $25.37.
Freddie Mac, the second-biggest provider of funding for
U.S. residential mortgages, climbed almost 9 percent to $27.18
on the NYSE.
The Dow Jones home construction Index <.DJUSHB> climbed 3
percent.
The stock of D.R. Horton Inc <DHI.N>, the largest U.S.
home builder, jumped 3 percent to $15.38.
The S&P financial index <.GSPF> rose 1 percent.
Before the opening bell, the Labor Department said the
overall Consumer Price Index for April rose 0.2 percent --
less than economists expected. Core CPI, excluding volatile
food and energy costs, gained 0.1 percent in April -- also
below forecast.
The CPI data helped calm investors a day after several key
Fed officials had voiced concerns about inflationary pressures
following surges in oil prices to a series of record highs for
the past several days.
(Additional reporting by Ellis Mnyandu)
(Reporting by Cal Mankowski; Editing by Jan Paschal)
