By Peter McKay
A few key earnings reports at consumer companies spurred the market higher Friday, all but cementing a solid weekly gain for stocks.
The Dow Jones Industrial Average (DJI) was recently up 66 points, or 0.7%, at 10,263.82, on pace to finish with a weekly gain of more than 2%. If the market can fully recover from a 94-point loss in the previous session by the closing bell, it will set a new 13-month high.
Strong earnings at Walt Disney (DIS), an analyst upgrade of Goodyear Tire & Rubber (GT), and a retreat in oil prices helped the market shake off a weak reading of consumer sentiment. Traders said that many bears had also placed bets early that the sentiment data would be glum, clearing the way for buyers to rush back following the data's actual release.
"We've been hearing for so long about the toll that weak employment and higher savings rates are having on consumer spending," said Todd Salamone, director of trading at Schaeffer's Investment Research in Cincinnati. "At this point, it might sting a little to see confirmation of that. But I think it's hard to have a sustained reaction."
The Nasdaq Composite Index (RIXF) was up 1.0% at 2,169.
The S&P 500 Index rose 0.9% to 1,096.
Disney shares got a lift after the entertainment giant's better-than-expected quarterly report.
Goodyear was up 4.6% after Goldman Sachs analysts upgraded the tire maker to a "buy" rating from "neutral," saying that recent selling in the company's shares was overdone following its weak fourth-quarter forecast.
The gains in Disney and Goodyear helped propel the S&P 500's consumer-discretionary sector a 1.2% gain in recent action, the strongest showing in a rally that spread across all the broad index's categories.
The Reuters/University of Michigan index of consumer sentiment fell to 66.0 in November, down from 70.6 in October. Analysts had been hoping to see the measure rise as high as 72 in the latest report.
The Dow came into Friday's action up 1.7% for the week, thanks largely to a 204-point surge Monday. But momentum and trading volume have tailed off markedly since then, with many traders becoming less apt to unload hoarded dollars in favor of more aggressive plays in stocks and commodities.
That "risk trade" continued to be out of favor Friday morning, with the dollar flat following trade data released prior to the opening bell.
The government reported that the U.S. trade balance widened more than expected in September, with import prices rising faster than export prices. The trade deficit widened to $36.5 billion dollars in September, compared to expectations for an expansion to $32 billion according to economists polled by MarketWatch.
Peter Cardillo, chief market economist at Avalon Partners, said the data were a mixed blessing for investors. While a widening trade gap hints at stronger-than-expected demand in the U.S. economy, many investors will not be pleased to see the dollar stabilize.
Cardillo said he still believes the market is in a broad trend higher. But he added: "We're probably headed for a mixed session with traders eyeing every movement of the dollar. That's probably going to be the driving force today."
Data on natural-gas inventories are due later Friday.
Investors on Friday will also pay close attention to speeches by Fed Chairman Ben Bernanke, New York Fed President William Dudley, and Chicago Fed President Charles Evans.
The dollar index was slightly weaker, down 0.3% to 75.40, though that's above the 15-month lows of 74.77 reached earlier in the week.
A slew of economic releases from Europe showed that the euro-zone economy finally escaped recession in the third quarter but advanced at weaker pace than economists anticipated. Led by Germany, the euro-zone rose at a 0.4% quarterly clip in the third quarter.
Major Asian benchmarks were mixed, with the Nikkei 225 falling 0.3% but the Hang Seng rose 0.5%. European indexes also were mixed, with the pan-European Dow Jones Stoxx 600 rising 0.2%.
In recent action, the U.S. Dollar Index (DXY) was off 0.3%, with the greenback trading lower against all six of the measure's component currencies.
Commodity prices were mixed. Oil futures slipped 98 cents to $75.96 a barrel in New York. Gold contracts rose $1.40 to $1,108 per ounce in New York. The Dow Jones-UBS Commodity Index was flat.
Treasury prices edged lower. The two-year note was off 1/32 to yield 0.826%. The 10-year note was off 3/32 to yield 3.453%.