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As commodities go, so goes the stock market. That, in fact, could well be the refrain on Wall Street these days. And never was that as true as it was yesterday. That is because after an initial selloff in raw materials had prompted a sharp drop in equity prices in the morning--in an apparent follow-up to the large reversal in the equity market on Wednesday--commodities reversed course, by rising as the day wore on. And stocks, as if on cue, followed higher in blind pursuit.
 
Now, of course, we cannot expect this trend to take hold every day, but for now, at least, that seems to be the short-term pattern. In addition to the jump in commodities, the market was underpinned by strength in so-called defensive stocks, such as consumer-staples and health care issues. Market leaders such as Merck (MRK - Free Merck Stock Report), Procter & Gamble (PG - Free P&G Stock Report), Pfizer (PFE - Free Pfizer Stock Report), and Hershey Foods (HSY) were typical of those kinds of equities that rallied during the session yesterday. In addition to strength in those issues, and allied stocks, we also saw gains in oil, with a barrel of crude for June delivery in New York, after initially falling back to about $95, reversing course and climbing to near $99. Copper, gold, and an array of agricultural futures also all gained ground. Silver, off sharply in the early going, came back to close the day with just a modest loss.
 
Overall, the late surge by the stock market helped the Dow Jones Industrial Average fashion a 66-point gain on the day, while the NASDAQ and the Standard and Poor's 500 Index climbed  by 18 points and six points, respectively. The small-cap Russell 2000 Composite, meantime, added seven points. In all, gaining stocks led decliners on the Big Board by a plurality of more than three-to-two; the positive gap on the NASDAQ was nearly two-to-one.
 
The news background, meanwhile, was not overly reassuring, as retail sales rose by a moderate 0.5% in April, a tad less than forecast, while March sales were upwardly revised from a mediocre gain of 0.4% to a more substantial increase of 0.9%. However, in the April figures, if we exclude sales at gasoline stations, which reflected the surge in prices at the pump, the increase for April was a more pedestrian 0.2%. That was hardly a compelling gain. The lackluster retail performance, along with the widening trade deficit, reported on Wednesday, now suggest that gross domestic product growth in the current quarter may have trouble reaching the 3% target that we have been estimating. The consensus growth forecast remains above 3%, for the time being.
 
Also in the news, the Labor Department reported that producer prices surged by 0.8% in April, principally on those higher fuel prices. In all, energy costs jumped by more than 2% last month, the seventh straight large gain in that important category. Inflation is clearly becoming a problem, and the only question is whether or not the Federal Reserve's contention that the problem is transitory will be borne out. We have our concerns.
 
As for the market in the day ahead, there were no special fireworks in Europe earlier today, with the principal bourses on the Continent generally showing slight gains on the session. That is similar to the pattern over here, with our own futures being modestly in the plus column with less than an hour to go before the start of the final trading day of the week. That movement, which includes gains of four-and-a-half points and five points in the S&P 500 Index futures and NASDAQ futures, respectively, would seem to presage a higher opening for stocks today in an extension of yesterday's late rally.
 
At the time of this article's writing, the author had positions in PFE.