U.S. Trade Gap Narrows 21%, Stocks Advance

Nichole Harper
08 Feb, 2013
New York City

U.S. stocks traded higher after trade deficit narrowed in December. Markets in Asia and Europe were higher after China reported a surge in exports to the U.S. and Europe and domestic demand improved. Oil rose to a high for the year.

[R]10:25 AM New York – U.S. stocks traded higher after trade deficit narrowed in December. Markets in Asia and Europe were higher after China reported a surge in exports to the U.S. and Europe and domestic demand improved. Oil rose to a high for the year.[/R]

Stocks in New York opened higher after U.S. trade gap narrowed and China reported a surge in exports and imports even adjusting for holiday calendar shift.

The U.S. trade deficit declined to $38.6 billion in December, 21% fall from $48.7 billion in November.

Exports increased 2.1% to $186.4 billion and imports declined 2.7% to $224.9 billion, according to the Commerce Department.

Oil imports declined to 223 billion barrels, the weakest since February 1997.

The narrower gap is likely to contribute to economic growth as businesses and consumers spend less on foreign goods.

European Leaders Agree on Smaller Budget

European markets gained after European leaders agreed on a smaller than expected fiscal budget and China reported higher than expected trade data in January lifting commodities prices.

Chinese Exports and Imports Soar

Market sentiment was bolstered after China reported higher than expected increase in trade in January. Trade surplus in January narrowed to $29.2 billion from $31.6 billion in December.

Exports rose 25% and gained 12.4% after adjusting for holiday calendar. Imports soared 28.8% and gained 3.4% after calendar adjustments.

Exports to the U.S. increased 14.5%, strongest in 10 months and the gain in exports to the European Union of 5.2% was the highest in 13 months.

Increase in import suggested that domestic demand is rising and companies are restocking inventories ahead of the holiday season.

Last year, Chinese factories were closed for a week on the account of Lunar New Year. This year the New Year falls in February.

Japanese Markets Halt 12-Week Rally

Stocks in Tokyo declined for the second day after the decline in yen paused and cautious statement from the European Central Bank president.

Sony plunged 10% after it reported eighth consecutive quarterly loss and disappointed investors who bid up stock 42% in January. Investors estimated weaker yen will help the company but only of if export sales are rising.

Stocks in Review

AOL, Inc. ((AOL)) surged 12.2% or $3.79 to $35.20 after the online content provider said total revenues in the fourth quarter grew 4% to $599.5 million from $576.8 million in the same period of last year.

Net income increased for the quarter in eight years when compared to a previous year quarter.

Net income in the quarter surged 57% to $35.7 million or 41 cents per diluted share compared to $22.8 million or 23 cents a share a year ago earlier.

The company also announced $100 million stock repurchase program.

LinkedIn Corporation ((LNKD)) soared 17.6% or $21.70 to $145.87 after the professional network reported revenue in the fourth quarter ending soared 81% to $303.6 million from $167.7 million in the same period of last year.

Net income in the quarter surged 67% to $11.5 million or 10 cents per diluted share compared to $6.9 million or 6 cents a share a year ago.

LinkedIn said revenue from talent solution segment in the U.S. jumped 62% to $189 million and marketing solution revenue climbed 68% to $83.2 million. Premium subscriptions products surged 79% to $59.4 million.

LinkedIn crossed 200 million members in the quarter, a growth of 39% from a year ago.

Moody’s Corporation ((MCO)) dropped 3.1% or $1.45 to $45.45 after the credit rating agency reported revenue in the fourth quarter ending jumped 33% to $754.2 million from $567.1 million in the same period of last year.

Net earnings were slightly below expectations but revenues were ahead of analyst estimates and issued earnings that were higher than current forecasts

Net income in the quarter jumped 66% to $160.1 million or 70 cents per diluted share compared to $96.2 million or 43 cents a share a year ago.

Moody''s expects full-year earnings per share in the range of $3.45 to $3.55.

Nuance Communications Inc ((NUAN)) plunged 16% after the speech processing software maker fourth quarter earnings and gross margins declined.