updated 4/17/2006 9:34:37 AM ET 2006-04-17T13:34:37

Stocks inched higher in light trading Thursday after government data indicated that the economy was growing at a slower pace, raising investors’ hopes that moderating economic growth might halt the Federal Reserve’s streak of interest rate hikes. The market’s major stock indexes ended the week narrowly mixed.

Major Market Indices

Thursday’s gains were capped as General Electric Co., Advanced Micro Devices Inc. and Alcoa Inc. fell and bonds declined sharply, sending the yield on the 10-year Treasury bill above 5 percent for the first time since 2002.

The 5 percent yield could have acted as a “psychological barrier,” said Mike Malone, trading analyst, Cowen & Co. The fact that it didn’t “suggests yields could move higher in the next week, keeping some pressure on equities.”

The day’s economic news quieted investors’ interest rate fears. Retail sales for March were slightly higher than economists expected, as were weekly unemployment claims, while business inventories were slightly leaner.

Together, the reports support “the Goldilocks view of the economy; the economy is still growing at a healthy pace, there are no signs of significant increases in inflation,” said Brian Bush, director of equity research, Stephens Inc.

Crude oil futures rose. A barrel of light crude settled at $69.32, up 70 cents in trading on the New York Mercantile Exchange. The U.S. dollar fell lower against other major currencies. Gold prices fell.

The U.S. financial markets were closed Good Friday.

The fuzzy outlook on interest rates didn’t get any clearer following a speech by U.S. Federal Reserve Governor Donald Kohn, who said he’s unsure how much tightening will be needed to keep inflation low, especially because labor markets are tight.

The Fed has raised official interest rates 15 straight times since mid-2004. The current rate is 4.75 percent and the Fed is widely expected to raise rates to 5 percent next month.

While the approaching holiday weekend kept many investors away — most financial markets around the world were closing for Good Friday — many traders were also making few moves in advance of next week’s cascade of earnings and economic reports. Earnings season will begin in earnest, the Labor Department will be issuing wholesale and consumer inflation data, and the Fed will release the minutes from its last policy-making meeting.

The holding pattern left the major indexes little changed for the week, with the Dow gaining 0.16 percent, the S&P 500 losing 0.49 percent and the Nasdaq slipping 0.55 percent.

GE slid 57 cents to $33.89 after its first-quarter profit rose 9 percent, meeting analysts’ estimates . Investors were also looking for a bolder outlook from the company, which reaffirmed that it expects earnings of $1.94 to $2.02 for the year. The consensus analyst estimate by Thomson Financial is earnings of $1.99 a share.

Advanced Micro Devices Inc., fell $3.62, or 10 percent, to $31.80 after the chipmaker’s second-quarter outlook came in below expectations .

Alcoa, the world’s largest aluminum company, fell 38 cents to $33.71 after it announced plans to sell its home exteriors business, which makes products including vinyl siding.

Bayer AG rose 37 cents to $40.62 after it made an official takeover bid for fellow German drugmaker Schering AG, offering $20.01 billion, slightly more than its previous $19.76 billion offer that Schering’s board had recommended be accepted. Schering AG rose 10 cents to $103.85.

Baidu.com Inc. rose 66 cents to $57.46 after the Chinese internet search company signed a memorandum of understanding with Intel Corp. to develop internet search in China for Intel platforms. Intel rose 33 cents to $19.45.

Wal-Mart Stores Inc. fell 13 cents to $45.77 after the company said its chief executive officer, Lee Scott, would take a one-month vacation in May .

Overseas, Japan’s Nikkei stock average rose 0.21 percent. Britain’s FTSE 100 added 0.48 percent, Germany’s DAX index rose 0.29 percent, and France’s CAC-40 gained 0.34 percent.

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