U.S. MARKET AVERAGES

Stocks traded near the flat level Friday as better-than-expected wholesale inflation figures countered a slowdown in retail sales and lowered guidance from Lucent Technologies Inc. and Tyco International Ltd.

The Labor Department reported that its Producer Price Index rose 0.9% in December, the biggest increase since a 1.7% jump in September, reflecting a big surge in gasoline costs, over $3 per gallon due to the impact of Hurricane Katrina.

In other economic news, the Commerce Department said that retail sales climbed 0.7% in December after rising by 0.8% in November.

The gold sector rallied during the mid-morning, showing an advance of more than 3% and reaching the high end of its recent trading range.

The airline sector posted a decline of 1.4%, falling to its lowest level since mid-December. AMR (AMR: chart) and Continental (CAL: chart) were two of the biggest drags on the group, falling by more than 2.5%.

Dow component Hewlett-Packard (HPQ: chart) was the most conspicuous advancer, reaching a new 52-week high. JDS Uniphase (JDSU: chart) set a fresh peak, adding to gains posted earlier in the week. Seagate Technology (STX: chart) and 3Com (COMS: chart) were also notable movers to the upside, hitting fresh peaks.

Lear (LEA: chart)moved to a new 52-week low, extending recent losses. NitroMed (NTMD: chart) added to recent weakness to establish a new low.

MOVERS AND SHAKERS

Advanced Micro Devices (AMD: chart) was downgraded to sell from hold at Deutsche Bank. The stock dropped 5%.

Dominion Homes (DHOM: chart) reported Q4 home sales drop of 41%, to 230 from 392 last year, while full-year 2005 home sales dropped by 21%, to 1,944 from 2,450 in 2004. Fourth-quarter home closings fell 6%, to 571 from 605, while 2005 home closings decreased by 24%, to 2,146 from 2,837. The company said its backlog as of Dec. 31 was 430 sales contracts, vs. last-year backlog of 632 contracts. The company’s shares fell 6.6%.

General Motors Corp. (GM: chart), the world''s largest automaker, said it expects $4 billion of savings in 2006 from restructuring measures aimed at lowering annual structural costs by $6 billion and material expenses by $1 billion. Company’s shares lost 1.8%.

Lucent (LU: chart), communications network equipment maker, lowered its annual revenue growth outlook on a decrease in sales in the United States and China. The company expects its 2006 revenue will be flat or grow at a low single-digit rate. Previously, the company had predicted annual revenue growth in the mid-single digits. Lucent said it now expects revenue for the Q1 of $2.05 billion, down from $2.43 billion in the Q4. The stock fell 1.8%.

Phazar Corp (ANTP: chart), antenna systems company, announced Q2 net income of $699,000, or 31 cents a share, compared with $505,000, or 22 cents a share, during the year-earlier period with quarterly revenue of $3.77 million, compared with $3.3 million last year. The stock surged 46.9%.

ECONOMIC NEWS

The Labor Dept. said that producer prices rose 0.9 percent in December, rebounding after falling 0.7 percent in November. The increase came in well above economist expectations of an increase of about 0.4 percent.

The rebound by producer prices came as energy prices moved back to the upside after moving sharply lower in November. The report showed that energy prices rose 3.1 percent in December following a 4.0 percent decrease in November.

The report also showed that core producer prices, which exclude food and energy prices, rose 0.1 percent in December, matching the increase in the previous month. Economists had been expecting core prices to increase by about 0.2 percent.

While the bigger than expected increase in producer prices may raise some concerns about inflation and higher interest rates, the modest increase in core prices suggests that core inflation remains well contained.

The Commerce Dept. said that retail sales rose 0.7 percent in December following an upwardly revised 0.8 percent increase in November. Economists had been expecting sales to increase 0.8 percent compared to the 0.3 percent increase originally reported for November.