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Stocks up ... but not by a whole lot

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By CNNMoney Staff

NEW YORK (CNNMoney) -- Stocks regained their composure Friday morning, pushing modestly higher after a three day run of losses.

The Dow Jones industrial average, the S&P 500 and the Nasdaq were all up in early trading.

Stocks have fallen in recent days as investors took some money off the table after a record-breaking run. Stocks have surged this year, supported by the Federal Reserve's $85-billion-per-month bond-buying program.

This week's retreat comes amid speculation that the Fed could begin cutting back, or tapering, its bond purchases as soon as next week, when the central bank holds its final policy meeting of the year.

But some strategists say the economy is still too weak for the Fed to start removing its support, despite the recent improvement in hiring.

"In this environment, the last thing the Fed wants to do is make a hasty decision it will later regret," said Scott Wren, chief equity strategist at Wells Fargo Securities.

The latest inflation data could bolster those who say the Fed is unlikely to act this month. Producer prices fell 0.1% in November, according to the Commerce Department. The Fed's target for inflation is 2%, and some economists say the central bank is more concerned about deflation than the size of its balance sheet.

Meanwhile, the bond market is on track to have its worst year in history. Investors have pulled out $72 billion from bond mutual funds this year through the first week of December, the biggest annual outflow on record.

The yield on the 10-year note rose to 2.89% this week, near the highest levels of the year, as investors brace for next week's Fed meeting. Bond yields rise when prices fall, so investors seem to be selling now in anticipation of fewer Fed purchases in the future.

On the move: Adobe shares surged after the software company reported sales Thursday that came in ahead of expectations.

Qualcomm named chief operating officer Steve Mollenkopf as its next CEO, succeding Dr. Paul Jacobs, who will remain as executive chairman. Mollenkpof's name was recently tossed around as a possible successor to Steve Ballmer at Microsoft.

Restoration Hardware plunged after one of the company's co-CEOs, Carlos Alberini, announced plans to step down. The departure overshadowed Restoration Hardware's better-than-expected quarterly results.

Shares of petroleum company Anadarko were down sharply after a court ruled that it and its Kerr-McGee unit acted improperly in its 2005 spinoff of paint materials company Tronox. The judge said that the company should pay for environmental cleanup.

European markets were higher in morning trading. Asian markets ended mixed.
   
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