The Bureau of Labor Statistics said today the producer price index, a measure of wholesale prices, showed no change in May. This follows a 0.3 percent decrease in April and a 1 percent gain in March. Core prices, which exclude food and energy, rose 0.2 percent after rising 0.1 percent for each of the previous two months.
The data do not give the Fed much cause to raise interest rates when it meets at the end of this month.
"The numbers show that inflation is not as dynamically out of control as the Fed would have you believe," said Jeff Logsdon, director of research at WR Hambrecht.
Logsdon added that the tight labor market might push up prices. "The labor demand component still remains out of control," he said. Yet high productivity might offset the labor shortage, a variable Logsdon said he thinks the Fed should watch more closely.
"Productivity has seemingly not been factored into the Fed's consideration of interest rate changes," he said.
The Nasdaq composite index rose 49.28 to 3,874.84 and closed up about 2 percent for the week, while the Standard & Poor's 500 index dropped 4.72 to 1,456.95 to finish down 1 percent for the week.
The Dow Jones industrial average fell 54.66 to close at 10,614.06, led by McDonald's and Wal-Mart. The index closed down nearly 2 percent for the week.
At the end of regular trading, Intel closed up 88 cents at $127.06. Microsoft finished unchanged at $68.81.
The CNET tech index rose 11.45 to 2,836.94. Winners edged out losers, with 60 of the 98 stocks in the index rising, 33 falling and five remaining unchanged.
Of the 18 sectors tracked, semiconductor makers posted the biggest jumps, gaining about 3 percent. Computer service companies were the day's biggest decliners, losing 3 percent.
FVC.com was the biggest percentage gainer on the Nasdaq on news that the provider of videoconferencing services received a new investment. The shares jumped $4.41, nearly 63 percent, to $11.44. Volume topped 4 million shares, more than 17 times the stock's average daily volume.
Among members of the CNET tech index, Electronic Data Systems and Citrix Systems posted large losses.
Electronic Data fell $14.44, or about 25 percent, to $43.38 after the company warned of a revenue shortfall during the present quarter. Volume exceeded 18 million shares, almost nine times the stock's average daily volume.
Citrix fell $10.38, or 20 percent, to $41.19 on a volume of 50.2 million shares, more than eight times its daily average, making it the most actively traded stock on the Nasdaq. Investors are concerned about signs the company might not meet expectations for the quarter.
The Philadelphia semiconductor index rose 26.19 to 1,168.83, led by chipmaker Lattice Semiconductor, which gained $7 to close at $76. Vitesse Semiconductor also recorded strong gains, rising $7.19, or almost 10 percent, to $75.25.
MP3.com settled a copyright infringement lawsuit today with Time Warner's Warner Music Group and Bertelsmann's BMG Entertainment. This sent the online music site's stock up $1.94 to $19.19.
SBC Communications, the largest U.S. local telephone company, announced that it will offer new price plans for nationwide wireless phone service, dropping extra fees for long-distance and calls outside a phone user's home market. The company's shares rose $1.13 to $48.13.
Shares of MicroStrategy rose about 140 percent this week on speculation that the company may have gained financing for its Strategy.com unit. The shares closed up $18.13, or 41 percent, at $62.25.