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4:20 pm : The major averages closed modestly higher Friday as some upbeat corporate news eventually helped investors look past mixed economic data.

With the Fed recently increasing its attention on raw material prices as the chief influence on inflation, the market's early focus was on the March PPI report. Core PPI in March checking in unchanged was initially comforting; but the soft number, coupled with rising food and energy costs, did not exactly signal that inflation is back under control.

Another report showing erosion in consumer sentiment and that one-year inflation expectations are at the highest level in eight months also sidelined the bulls in early action.

Be that as it may, investors gradually embraced leadership in two of the S&P 500's most heavily-weighted sectors -- Financials and Health Care. The latter got a huge boost from Merck (MRK 50.20 +3.84), which opened up 6% at a three-year high after upside Q1 and FY07 EPS guidance prompted an upgrade from Goldman Sachs. By far today's best performing Dow component (+8.3%), Merck accounted for more than half of the Dow's 59-point advance.

Financials garnered some early interest following reports that SLM Corp. (SLM 46.76 +6.01) could be taken private in a deal worth $30 bln, including debt. ABN AMRO (ABN 48.28 +2.49) confirming receipt of a joint letter from three potential acquirers late in the day gave the sector an added lift.