US stocks ended a quiet session today with a moderate gain on strong earnings news and a decline in the trade deficit.
Wall Street rebounded from Tuesday’s losses after Circuit City Stores reported its earnings jumped 65%. The electronic retailer’s news, coming off an upbeat earnings report from Alcoa early in the week, reassured investors nervous about rising commodity prices and their impact on corporate profits.
In economic news, America’s trade deficit improved in February, as the imbalance with China dropped to the lowest level in nearly a year. But the overall deficit was still the third highest on record.
The deficit for the first two months of this year is running 13.5% above the pace in early 2005, a year when the US deficit hit an all-time high of US$723.6bn (€597.85bn).
The Commerce Department reported today that the deficit fell to US$65.7bn (€54.27), a 4.2% decline from January’s record imbalance of US$68.7bn (€56.75).
“We have a minor stabilisation of the market after a couple of slightly softer days,” said Stuart Schweitzer, global markets strategist at JPMorgan Asset & Wealth Management. “No big surprise.”
The Dow Jones industrial average rose 40.34, or 0.36%, to 11,129.97.
Broader stock indicators were also higher. The Standard & Poor’s 500 index rose 1.55, or 0.12%, to 1,288.12, and the Nasdaq composite index rose 4.33, or 0.19%, to 2,314.68.
The market seems to be moving in a pattern similar to recent earnings seasons, in which it rises with high expectations for earnings before companies begin to announce, then enters a pullback or a lull as earnings season begins, said Richard Cripps, chief market strategist for chief market strategist for Stifel Nicolaus, a broker based in St Louis.
Investors were also watching events overseas; nervousness about Iran’s nuclear capabilities contributed to Wall Street’s decline on Tuesday, when the Dow fell more than 51 points.
There were further signs that the US housing market is slowing, which some investors view as a sign that Federal Reserve rate hikes are cooling down the economy. The Mortgage Bankers Association’s weekly home purchase index decreased by 4.7% and the refinance index dropped 6.6%.
Bonds fell, with the yield on the 10-year Treasury note at 4.98%, down from 4.93% on Tuesday. The US dollar was mixed against other major currencies. Gold prices were higher.
Crude oil futures fell. A barrel of light crude settled at US$68.62 (€56.69), down 36 cents, in trading on the New York Mercantile Exchange.
Circuit City rose 2.04, or 8.3%, to 26.65 after its fourth-quarter earnings soared on strong sales and improved supply management. Earnings from Circuit City, the US’s No 2 chain of consumer electronics stores behind Best Buy, were US$146.6m (€121.12), or 84 cents per share, beating analysts’ estimates of 84 cents a share.
Alcoa, which reported earnings after the close of trading Monday, was unchanged at 34.09.
Bausch & Lomb shares fell 3.42 to 45.61 shedding another 7%, after the eye care products company said the source of an increase in fungal infections linked to one of its lens solutions remains a mystery and retailers continued to pull the products from their shelves.
Gannett, the largest newspaper publisher in the US, fell 1.06 to 57.76 after it reported an 11.5% decline in profit as the company began expensing stock options and recording costs from its new newspaper partnership in Detroit.
Advancing issues narrowly outnumbered decliners on The New York Stock Exchange, where volume totalled 1.4bn shares, down from 1.59bn on Tuesday.
The Russell 2000 index of smaller companies rose 5.66, or 0.76%, to 747.77.