Stocks soar on tame inflation report

The Dow Jones Industrial Average soared more than 100 points today after a government report showed calmer consumer-price growth than had been expected.

The Labor Department said the Consumer Price Index rose 0.7% from April to May, a number that was in line with economists' expectations but the second-biggest jump in 16 years. The CPI rose 0.4% in April.

The more closely watched core CPI, which excludes volatile energy and food prices, rose 0.1%, less than economists' expected 0.2% rise.

Wall Street shrugged off any inflation worries and extended the stock market rally to three days.

The Dow Jones Industrial Average closed up nearly 86 points to 13,639. The blue-chip index has surged more than 340 points over the last three days, the biggest such point gain since November 2004. It is less than 40 points below the record close reached on June 4.

The Nasdaq Composite Index jumped 27 points to nearly 2,627, and the Standard & Poor's 500 Index was up nearly 10 points to almost 1,533.

Light, sweet crude oil rose 41 cents to $68.06 a barrel.

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There was some concern that the headline number could further fuel inflation worries, Joseph LaVorgna, the chief U.S. economist for Deutsche Bank, told MarketWatch. But the contained growth in core CPI could help offset those worries, he added.

Year over year, the CPI rose 2.7%, with the core index up 2.2%. In April, the core number was up 2.3% from April 2006.

The report is another indication that the Federal Reserve will keep interest rates on hold for the coming months, as inflation continues to be one of its biggest concerns.

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Yesterday, the government said prices paid to producers rose 0.9% in May, also due to higher gas prices. The core Producer Price Index, however, rose 0.2%, in line with economists' expectations.

NYMEX looking for a buyer

NYMEX Holdings (NMX, news, msgs), the parent of the New York Mercantile Exchange, is exploring a sale, according to Bloomberg News, with possible buyers including NYSE Euronext (NYX, news, msgs), Deutsche Boerse and Chicago Mercantile Exchange Holdings (CME, news, msgs).

NYMEX could get $155 per share, which would value a sale at $14.3 billion, Bloomberg wrote. Shares of NYMEX rose $1.97, or 1.4%, to $141.77.

NYMEX, the biggest physical-commodity futures exchange, trades benchmark crude oil, natural gas and gold contracts.

"What this does is speak to how size is extremely important to being competitive," said Mark Williams, a finance professor at Boston University, told Bloomberg. "The derivatives market in general has really exploded in part because trade is becoming more global."

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Trading in derivatives, which include futures, has jumped 22% in the U.S. in January and February compared with the first two months of 2006, according the Futures Industry Association, a trade group.

A derivative is a financial instrument that is derived from an underlying asset's value. Traders agree to exchange money, assets or another value at a future date based on the underlying asset instead of trading the asset itself. Assets themselves could range from gold to stock to even interest rates.

A sale would be the latest in the consolidation among major exchanges. In April, the New York Stock Exchange's parent, NYSE Group, bought Euronext for $14.6 billion. There has been a bidding war for CBOT Holdings (BOT, news, msgs), the parent of the Chicago Board of Trade, with IntercontinentalExchange (ICE, news, msgs) facing off with the Chicago Merc.

NYMEX went public in November.

Expedia might take a trip . . . private

Shares of online travel Web site Expedia (EXPE, news, msgs) jumped 86 cents, or 3.5%, to $25.32 by midday after rumors started to circulate that the company could be the next to go private.

The company is considering a $30-per-share buyout deal, according to published reports.

Expedia's TripAdvisor travel service would be spun off, and 400 jobs would be eliminated.

Expedia had traded at a 52-week high of $26.70 earlier this morning.

Adobe reports jump in profit, but . . .

Software maker Adobe Systems (ADBE, news, msgs) reported fiscal-second-quarter earnings of $152.5 million, or 26 cents per share, up from $123.1 million, or 21 cents per share, in last year's second quarter.

But shares fell $1.21, or 2.7%, to $42.75 in midday trading after the company failed to provide sufficiently sunny guidance for Wall Street.

Excluding one-time items, Adobe earned $233.2 million, or 37 cents per share. Analysts had been expecting earnings of 31 cents per share.

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The company forecast earnings for the third quarter of 28 to 31 cents per share. Excluding expenses, Adobe expects earnings of 39 to 41 cents; the consensus estimate is 40 cents per share.

"It's a classic example of The Street always wanting more," Piper Jaffray analyst Gene Munster told Bloomberg.

Intel gets an upgrade

Intel (INTC, news, msgs) was upgraded to "buy" from "neutral" by Goldman Sachs Group (GS, news, msgs) analyst James Covello.The move by rival Advanced Micro Devices (AMD, news, msgs) "to an outsourced manufacturing strategy is likely to have negative repercussions for its product quality and, in turn, its market share over the longer term," Covello wrote in a research note to clients. Intel will benefit from that move, he wrote.

Covello also boosted his price target to $28 per share from $22.

Shares of Intel rose 80 cents, or 3.4%, to $24.03 in afternoon trading.

Bob Barker, come on down!

Game-show fans may shed a tear today when Bob Barker marks his last time hosting "The Price Is Right."

Barker has hosted the game show, which airs on CBS TV (CBS, news, msgs), for 35 years and has won 17 Emmy Awards.

"I will be 83 years old on Dec. 12," Barker said when he announced his retirement, "and I've decided to retire while I'm still young."

The final show was taped last week.

By Elizabeth Strott with wires