NEW YORK – U.S. stocks closed higher Wednesday following news of a narrower trade gap, after the Dow Jones Industrial Average touched a three-week high with the help of an International Business Machines upgrade.
The Dow Jones Industrial Average finished up 43.50 points at 10557. Earlier the average reached 10564, its highest level in three weeks.
The S&P 500 ended 1.08 points higher at 1223 as investors wondered whether it could break above the 1225 point today, which would mark a four-year high.
The Nasdaq composite closed up 0.96 at 2144.
Stocks Wednesday drew strength from positive earnings reports and news that the U.S. trade deficit in May dropped 2.8 percent to $55.3 billion. Wall Street economists had expected a deficit of $57 billion.
However, the details of the report suggested that the narrowing of the gap was likely to be short-lived, given the post-May surge in oil prices.
Marc Pado, U.S. market strategist at Cantor Fitzgerald, said an earnings report after the close from Apple Computer, and monthly retail sales and consumer price reports Thursday, could provide the much-awaited catalysts for the S&P 500 to brave the 1225 level – if the news is good.
The Energy Department and the American Petroleum Institute reported a decline in crude stocks and an increase in distillate inventories in the latest week.
In theory, dwindling supplies should send crude futures higher and stronger crude prices in turn should upset the stock market. Instead, analysts have been surprised at the stock market’s unusual resilience in the face of rising oil prices. Crude closed down 62 cents at $60.
Gold for August delivery finished down $2.50 at $424.60, pressured by a dollar rally.
Treasury prices were under pressure after the trade gap news. The benchmark 10-year note in late trade was down 4/32 at 99 23/32 with a yield of 4.162 percent.
The dollar was higher after the trade gap news, trading up 1 at 111.90 yen, as the euro dipped 0.016 percent to $1.2084.
Import prices rose 1 percent in June, in line with the expectations of economists polled by MarketWatch. Imported oil prices increased by 7.6 percent.
“If we get decent data we could see that,” Pado said.
International Business Machines (IBM) received an upgrade from Sanford Bernstein analyst Toni Sacconaghi to outperform from market perform. Sacconaghi said investors were likely to focus on the company’s services signings levels. IBM stock closed 1.7 percent higher, up $1.41 at $81.45.
Harley-Davidson (HDI) reported strong second-quarter results and raised its full-year outlook, noting strong retail sales, especially in Europe. The stock ended up 68 cents at $50.38.
Abbott Laboratories (ABT) announced a 38 percent increase in second-quarter profit, due partly to strong sales of its arthritis drug. The company also announced new measures to cut costs expected to save $200 million a year before taxes. The shares fell 4.1 percent to $47.65.
The Wall Street Journal said stents made by Boston Scientific had problems after a voluntary recall. The paper cited a review of Food and Drug Administration data. The stock (BSX) finished down 38 cents at $27.48.
Hospitals operator HCA (HCA) offered a weak outlook for the second quarter, noting decreasing admissions and depreciation. The stock traded lost 8.8 percent to close at $50.05.
J.P. Morgan raised its price target on Altria Group (MO) to $76 from $71 on Wednesday and also added the company to its U.S. focus list. The stock rose 1.2 percent to $65.83.
Morgan Stanley also upgraded Bank of America (BAC), saying the market is too bearish on its earnings outlook. Shares of Bank of America moved 44 cents higher to $45.75.
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AP-NY-07-13-05 1722EDT
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