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Stocks rise as trade deficit narrows in October
Source: Agencies |
December 11, 2009, Friday
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STOCK indexes rose yesterday as a jump in exports offset concerns about an increase in weekly unemployment claims.
A weaker dollar is lifting demand for U.S. goods, which become less expensive for foreign buyers when the greenback falls. The Commerce Department said a rise in exports helped narrow the nation's trade gap to US$32.9 billion in October. Economists had been expecting an increase. Exports rose 2.5 percent, the sixth straight monthly increase.
James Cox, managing partner at Harris Financial Group in Colonial Heights, Virginia, said the increased demand for U.S. goods will help boost the nation's economy.
"These smaller trade balances are great news," Cox said. "Any time you have a small trade balance, that will really contribute greatly to GDP."
The trade figures helped offset mixed jobs numbers. The Labor Department said the number of laid-off workers seeking jobless benefits rose more than expected last week to 474,000 after falling for five straight weeks, slightly higher than analysts were expecting. However the four-week average, which is less volatile, fell to the lowest level since September 2008.
The gains in stocks came as the dollar stabilized. For months, stocks and the dollar have moved in the opposite direction. Record-low U.S. interest rates have pressured the dollar for much of this year, leading investors to buy assets like stocks and commodities that can earn better returns than cash.
In recent weeks, signs of improvement in the economy have brought expectations that the Federal Reserve might raise interest rates sooner than expected. That would strengthen the dollar.
Anthony Chan, chief economist at JPMorgan Private Wealth Management in New York, said the rise in weekly unemployment claims eroded some of the enthusiasm over rising exports.
"That is what's preventing the market from really galloping higher," Chan said.
The Dow Jones industrial average rose 66.78, or 0.7 percent, to 10,405.83, pushing it back into the winning column for the month.
The Standard & Poor's 500 index rose 6.40, or 0.6 percent, to 1,102.35, while the Nasdaq composite index rose 7.13, or 0.3 percent, to 2,190.86.
Chan said investors are not only eager to safeguard their gains as the end of the year approaches but are also harder to impress following the government's report last week that employers cut fewer jobs in November than at any time since the recession began two years ago.
"It raises the hurdle to get the market excited," he said.
The S&P 500 index is up 22 percent for the year after a nine-month rally but hasn't gained much ground in the past month.
In other trading, Treasury prices fell for a second day after an auction of 30-year bonds drew weak demand. The slump in prices for long-dated bonds pushed yields higher. The yield on the benchmark 10-year Treasury note rose to 3.48 percent from 3.44 percent late Wednesday, while the yield on the 30-year bond rose to 4.49 percent from 4.42 percent.
Gold rose after a four-day slide, while oil fell for a seventh day, losing 13 cents to settle at US$70.54 a barrel at the New York Mercantile Exchange.
Three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 1.1 billion, in line with Wednesday.
The Russell 2000 index of smaller companies fell 2.65, or 0.4 percent, to 595.38.
A weaker dollar is lifting demand for U.S. goods, which become less expensive for foreign buyers when the greenback falls. The Commerce Department said a rise in exports helped narrow the nation's trade gap to US$32.9 billion in October. Economists had been expecting an increase. Exports rose 2.5 percent, the sixth straight monthly increase.
James Cox, managing partner at Harris Financial Group in Colonial Heights, Virginia, said the increased demand for U.S. goods will help boost the nation's economy.
"These smaller trade balances are great news," Cox said. "Any time you have a small trade balance, that will really contribute greatly to GDP."
The trade figures helped offset mixed jobs numbers. The Labor Department said the number of laid-off workers seeking jobless benefits rose more than expected last week to 474,000 after falling for five straight weeks, slightly higher than analysts were expecting. However the four-week average, which is less volatile, fell to the lowest level since September 2008.
The gains in stocks came as the dollar stabilized. For months, stocks and the dollar have moved in the opposite direction. Record-low U.S. interest rates have pressured the dollar for much of this year, leading investors to buy assets like stocks and commodities that can earn better returns than cash.
In recent weeks, signs of improvement in the economy have brought expectations that the Federal Reserve might raise interest rates sooner than expected. That would strengthen the dollar.
Anthony Chan, chief economist at JPMorgan Private Wealth Management in New York, said the rise in weekly unemployment claims eroded some of the enthusiasm over rising exports.
"That is what's preventing the market from really galloping higher," Chan said.
The Dow Jones industrial average rose 66.78, or 0.7 percent, to 10,405.83, pushing it back into the winning column for the month.
The Standard & Poor's 500 index rose 6.40, or 0.6 percent, to 1,102.35, while the Nasdaq composite index rose 7.13, or 0.3 percent, to 2,190.86.
Chan said investors are not only eager to safeguard their gains as the end of the year approaches but are also harder to impress following the government's report last week that employers cut fewer jobs in November than at any time since the recession began two years ago.
"It raises the hurdle to get the market excited," he said.
The S&P 500 index is up 22 percent for the year after a nine-month rally but hasn't gained much ground in the past month.
In other trading, Treasury prices fell for a second day after an auction of 30-year bonds drew weak demand. The slump in prices for long-dated bonds pushed yields higher. The yield on the benchmark 10-year Treasury note rose to 3.48 percent from 3.44 percent late Wednesday, while the yield on the 30-year bond rose to 4.49 percent from 4.42 percent.
Gold rose after a four-day slide, while oil fell for a seventh day, losing 13 cents to settle at US$70.54 a barrel at the New York Mercantile Exchange.
Three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 1.1 billion, in line with Wednesday.
The Russell 2000 index of smaller companies fell 2.65, or 0.4 percent, to 595.38.
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