US stocks rose on Thursday as data showing inflation slowed last month boosted investors' hopes that the Federal Reserve will keep to its course of measured interest rate hikes.
Shares of Nortel Networks Corp fell more than 7 percent as a revenue warning from the telecommunications equipment company compounded concerns about corporate profits.
The Dow Jones industrial average was up 31.27 points, or 0.31 percent, at 10,262.63. The Standard & Poor's 500 Index was up 4.04 points, or 0.36 percent, at 1,124.41. The technology-laced Nasdaq Composite Index was up 10.75 points, or 0.57 percent, at 1,907.27.
Markets were reassured after the Labour Department said the US consumer price index inched up just 0.1 percent in August as gasoline and car prices fell. The index without volatile food and energy prices also rose 0.1 percent, less than Wall Street expected.
"We are trading up small on light volume amid the Jewish (New Year) holiday," said David Hegarty, head of equity trading for Commerzbank Securities.
"This has mostly spurred on from the CPI data - the CPI more than offset the Nortel warning."
The Fed's policy-setting committee is scheduled to meet on Tuesday, and economists expect the US central bank to raise interest rates by a quarter of a percentage point.
In other news on the economy, an index of manufacturing activity in the Philadelphia region deteriorated more sharply than expected,
Nortel, North America's largest maker of telecommunications equipment, said. It expects in report lower third-quarter revenues compared to the second quarter. Its stock fell 27 cents to $3.53.
Research In Motion Ltd rose more than 6 percent to $74.45, touching a 4-year high, after the firm said it will introduce the newest version of its popular BlackBerry wireless e-mail device in Europe and Australia through mobile phone company Vodafone Group Plc.
Oil retreated as some refineries started to return to operations after Hurricane Ivan reached the US Gulf Coast US light crude eased 21 cents to $43.37 a barrel on NYMEX.
Shares of Home Depot Inc climbed 1.4 percent to $38.93. Residents in the path of Hurricane Ivan and other storms have been stocking up on supplies like lumber and gas-powered generators that the retailer sells.
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