MARKETWATCH

Stocks and bonds soared as investors reacted to a happy surprise: a better-than-expected report on wholesale inflation. The Labor Department reported that producer prices fell five tenths of a percent in September. That's the steepest decline since August of 1993. Falling energy and coffee prices accounted for most of the move. Wholesale inflation is now rising at just a 2% annual rate. Those numbers particularly cheered the stock market, which had been bracing for a rise of as much as six tenths of a percent. The Dow Jones industrials surged 50 points in the first 15 minutes of trading. But then profit-takers moved in, leaving the Dow at 3889.95, a gain of 14.80 points. The S&P 500 rose 2.32 to 467.79. NASDAQ stocks inched up 0.89 to 767.89. Bond prices surged, as the yield on the benchmark 30-year Treasury fell to 7.85%. The price of gold fell a dollar to $386.95 in London trading.