Dec. 10, 2010 (WALLSTmoney) --
In New York, equities edged higher Friday as investors responded to a surprise drop in the U.S. trade gap, while China announced another move aimed at cooling its red-hot economy.
The Dow Jones Industrials surged 40.26 points to end the day and week at 11,410.30
The S&P 500 moved up 7.40 points to 1,240.40. The Nasdaq Composite Index gained 20.87 points to 2,637.54.
The modest advance came after government data showed that the U.S. trade deficit unexpectedly narrowed in October, reaching its lowest level in nine months. A separate report on consumer sentiment also came in better than expected.
The trade data suggests that U.S. economic growth in the fourth quarter might be stronger than expected, according to some experts.
But gains were tempered by news that China's central bank further hiked its reserve requirement ratio for banks. The move was part of an effort to cool inflation and avoid an economic crash landing, officials said.
It also came after government data showed that China's trade surplus fell 16% in November, as exports surged 35% from the prior month.
The S&P 500 is shaking up the contents of its broad-market index. F5 Networks Inc., Netflix Inc., and Newfield Exploration Co. will replace The New York Times Co., Office Depot Inc. and Eastman Kodak Co. Cablevision Systems Corp. is taking the place of King Pharmaceuticals Inc., but only because King Pharmaceuticals has agreed to be acquired by Pfizer
GE was the biggest gainer on the Dow, rising 3% after the conglomerate boosted its quarterly dividend 17% to 14 cents per share. JPMorgan, Verizon and United Technologies were also strong.
But consumer stocks Kraft Foods and Coca Cola dragged on the index.
GE announced plans to pay a fourth-quarter dividend of 14 cents U.S. per share, up from 12 cents U.S., and said it expects to make "opportunistic share repurchases" next year.
Community Health Systems announced Thursday that it has made an offer to acquire smaller rival Tenet Healthcare for $6 U.S. per share, a premium of 40% over Tenet's closing stock price Thursday. An initial offer to Tenet was rejected and this is Community Health Systems' second attempt.
Shares of Community Health Systems rose 16%, while shares of Tenet Healthcare surged 54%.
Green Mountain Coffee reported fourth-quarter net income of $27 million U.S., or 20 cents U.S. per share, in line with expectations. But shares fell 12% as investors responded to the company's outlook and decision to no longer provide specific guidance about its K-Cup sales.
Earlier in the week, investors cheered as Washington appeared close to reaching a compromise deal to extend Bush-era tax cuts for another two years. But House Democrats voted Thursday against considering the tax package, which would also provided for extended unemployment benefits and a break in payroll taxes.
Investors are mostly confident that some tax rate compromise will be passed.
Economically speaking, the U.S. trade gap narrowed by nearly $6 billion U.S. in October to $38.7 billion U.S., the Commerce Department said. The report was a surprise, as economists had expected the trade gap to have widened to $44.5 billion U.S. in October from $44 billion U.S. the previous month.
The decline brought the U.S. trade deficit to a nine-month low, as exports jumped 3.2% to $158.7 billion U.S., the highest since August 2008, and imports fell 0.5% to $197.4 billion U.S.
The University of Michigan/Reuters index of consumer confidence for early December rose to 74.2 from 71.6 last month. Economists had expected a more modest increase to 72.5, according to consensus estimates from Briefing.com.
The price on the benchmark 10-year U.S. Treasury dipped, raising the yield to 3.30% from Thursday's 3.22%. Treasury prices and yields move in opposite directions.
Oil stepped back 46 cents a barrel to $87.82 U.S.
Gold futures for February delivery fell $6.40 to settle at $1,386.40 U.S. an ounce.
