Stocks Edge Higher After Trade Deficit Report


Stocks edged higher on Wall Street Friday after the government reported that the U.S. trade deficit narrowed sharply in December. The major indexes were also boosted by strong earnings reports.

The Dow Jones industrial average rose 48 points to 13,991 as of 1:54 p.m. EST. The index climbed back above 14,000 during morning trading. On Feb. 1, it closed above 14,000 for the first time since 2007.

The Standard & Poor’s 500 index was up 7 points at 1,517 and the Nasdaq composite rose 29 points to 3,194.

The trade deficit fell nearly 21 percent in December from November to $38.6 billion, as exports rose while oil imports plummeted. That’s the smallest in nearly three years. The smaller trade gap means the economy likely performed better in the final three months of last year than first reported last week.

“The trade balance was surprisingly very good,” said Phil Orlando, chief market strategist at Federated Investors.

The government estimated that the U.S. economy contracted at an annual rate of 0.1 percent in the last three months of 2012. Orlando estimates that growth may now be revised to show growth of 0.5 percent.

Shares of LinkedIn, the online professional networking service, jumped $27.44, or 22 percent, to $147.60 after the company reported fourth-quarter results late Thursday that beat analysts’ forecasts. AOL soared $2.20 to $33.61 Friday after the internet company said its quarterly revenue grew for the first time in eight years, helped by strength in worldwide advertising.

Currently, analysts are expecting earnings for the fourth quarter of 2012 to rise 6.5 percent for S&P 500 companies, according to data from S&P Capital I&Q. That’s an increase from the 2.4 percent growth rate recorded for the preceding quarter.

Wall Street also braced for what was forecast to be the largest winter storm in more than a year with up to 2 feet of snow forecast along the densely populated Interstate 95 corridor from the New York City area to Boston and beyond.

Markets are little changed for the week, suggesting that a rally that pushed the major indexes close to record levels early this year may have stalled.

The Dow had its best January in almost two decades and is up 6.9 percent on the year. The S&P 500 is 6.4 percent higher in the same period. A last-minute budget deal to avoid the “fiscal cliff” and optimism about the housing market and a gradually improving jobs market have powered the rally.

Stocks have benefited as investors poured a net $4.1 billion into stock mutual funds since the start of the year, according to data provided by Lipper.

“I’m very encouraged by the fact, that finally, for the first time in many years, individual investors seem to be participating in this,” said David Kelly, chief global strategist at J.P. Morgan Funds.

As stocks have gained, Treasurys have slumped. The yield on the 10-year note rose, which moves inversely to its price, rose one basis point to 1.97 percent.

Among other stocks making big moves;

  • Microchip Technology, a semiconductor maker, jumped $2.61 to $36.55 after its earnings beat estimates. The company said it was seeing “exceptionally strong” bookings.
  • Moody’s slumped $4.92 to $42.07 even after reporting that fourth-quarter net income jumped 66 percent and revenue blew away expectations. Many are expecting the ratings agency will be the next target of the Justice Department, which filed a suit against rival Standard & Poor’s for its actions before the housing market collapse.

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