Stocks rebound on solid earnings
NEW YORK » Stocks ended a quiet session with a moderate gain yesterday on strong earnings news and a decline in the trade deficit.
Wall Street rebounded from Tuesday's losses after Circuit City Stores Inc. reported its earnings jumped 65 percent. The electronic retailer's news, coming off an upbeat earnings report from Alcoa Inc. 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 percent above the pace in early 2005, a year when the U.S. deficit hit an all-time high of $723.6 billion.
The Commerce Department reported Wednesday that the deficit fell to $65.7 billion, a 4.2 percent decline from January's record imbalance of $68.7 billion.
"We have a minor stabilization 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 percent, to 11,129.97.
Broader stock indicators also closed higher. The Standard & Poor's 500 index rose 1.55, or 0.12 percent, to 1,288.12, and the Nasdaq composite index rose 4.33, or 0.19 percent, to 2,314.68.
The market seems to be moving in a pattern similar to recent earnings seasons, in which the market rises with high expectations for earnings before companies begin to announce, then enters a pullback or a lull as earnings season begins, said Richard E. 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 the 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 percent and the refinance index dropped by 6.6 percent.
Bonds fell, with the yield on the 10-year Treasury note at 4.98 percent, up from 4.93 percent late Tuesday. The U.S. dollar was mixed against other major currencies. Gold prices were higher.