By Jonathan Cheng
U.S. stocks pushed higher, nudging the Dow Jones Industrial Average back above the 14000 level, as investors responded to a surprise narrowing of the U.S. trade deficit and a broad-based rebound in European markets.
The blue-chip Dow rose 65 points, or 0.5%, to 14009, its first appearance above 14000 since falling below that level on Tuesday. The Standard & Poor's 500-stock index tacked on seven points, or 0.5%, to 1517, and the Nasdaq Composite rose 26 points, or 0.8%, to 3191.
Technology shares led the gains. Hewlett-Packard, Microsoft and Intel were the three strongest performers among Dow components, gaining 1.7%, 1.3% and 1.3% respectively.
Microchip Technology soared to top the S&P 500 advancers, jumping 7.8% after the semiconductor maker boosted its earnings estimates for the current quarter. Data storage companies Seagate Technology and Western Digital were next in line, rising 3.7% and 2.9% respectively.
The gains came after a report showed the trade deficit narrowing unexpectedly, the biggest contraction in nearly four years, as petroleum imports fell to the lowest level in more than a decade. The deficit narrowed to $38.5 billion in December, well below expectations for a decline to $45.5 billion, from $48.7 billion in November.
Many economists and investors said the surprise narrowing of the deficit makes it a near certainty that a revision of the U.S. gross domestic product in the fourth quarter, expected next week, will likely show continued growth during the last three months of 2012. An initial reading last week stunned investors with a 0.1% contraction in the economy.
"The trade deficit is going to suggest we might have a positive print for those revised fourth-quarter figures," said Kent Engelke, chief economic strategist at Capitol Securities, which oversees $4 billion in Richmond, Va. Mr. Engelke said the numbers reflected the U.S.'s new strength in the global energy sector, while adding that "the drop in the value of the dollar is making our exports more competitive."
Separately, inventories at U.S. wholesalers fell 0.1% in December as sales went flat, the first decline since June. Economists had forecast a 0.5% increase.
The economic data came as traders on Wall Street braced for a major blizzard in the Northeast. The National Weather Service said a "potentially historic" blizzard could dump as much as two feet of snow across New England and the mid-Atlantic region on Friday.
Global stock markets were mostly higher after data showing China's trade surplus in January narrowed to $29.2 billion from December's $31.6 billion, but exports surged 25% and imports climbed 29%, both well ahead of the previous month's increases.
The Stoxx Europe 600 gained 1.2% to end its fourth losing week out of five on a bright note. Separately, December industrial output in Italy rose 0.4% on the month, but for all of 2012 output was at the lowest level since at least 1990. Italy's FTSE MIB index gained 1.3%.
In Asia, China's Shanghai Composite advanced 0.6% ahead of next week's weeklong Lunar New Year holiday, and Australia's S&P ASX 200 added 0.7%.
Japan's Nikkei Stock Average bucked the trend by shedding 1.8% to close down slightly on the week, snapping a 12-week winning streak, as the yen rallied and Sony tumbled after it reported a surprise quarterly loss.
Crude-oil futures rose 0.6% to above $96.40 a barrel, while gold futures were roughly flat at around $1,670 an ounce. The dollar edged up against the euro and tumbled against the yen. Demand for Treasurys fell, pushing the yield on the benchmark 10-year note up to 1.98%.
In corporate news, LinkedIn rallied 18% after the professional social network's earnings and revenue topped estimates, and the company provided a current quarter revenue outlook that was above current projections.
McDonald's gained 0.8% after global same-store sales dropped 1.9% in January, though the fast-food chain did much better than expected in the U.S.
Moody's slid 4.1%, making the worst performer on the S&P 500, after the credit rater missed earnings estimates.
AOL rose 9.3% after the company reported its first quarter of revenue growth in eight years and unveiled a $100 million stock repurchase program.
Activision Blizzard climbed 8.1% after the videogame maker beat earnings and revenue expectations, with strength in its Call of Duty and Skylanders franchises.
Coinstar fell 7.8% after the company's fourth-quarter sales missed estimates amid slowing growth in Redbox revenue. The company also provided current quarter earnings and revenue projections that were below current forecasts.
EnteroMedics plunged 57% after the company said a trial of its obesity treatment didn't meet its primary efficacy measures, but did meet its primary safety endpoint.
Nuance Communications slid 18% after the maker of software that converts speech to text missed earnings and revenue estimates, amid rising costs.
RadioShack soared 7.4% after the retailer named a Walgreen executive to replace its acting chief.
Riverbed Technology tumbled 20% as acquisition-related costs masked the network-technology provider's stronger revenue numbers in the latest quarter. The company also issued a cautious projection of core earnings this quarter.
Several index changes were announced by S&P Dow Jones Indices, with PVH set to replace Big Lots in the S&P 500. Big Lots, which has a market capitalization below $2 billion, will move to the S&P MidCap 400. PVH edged up 0.1% and Big Lots gave up 0.3%.
Two initial public offerings were also in the mix. Units of New Source Energy Partners fell 2.3%, making it the latest master limited partnership to struggle at the outset of trading. The company owns developed and undeveloped oil and natural-gas properties in Oklahoma.
The other IPO on deck Friday, Health Insurance Innovations, will begin trading later in the morning.
Write to Jonathan Cheng at email@example.com