The Standard Poor’s 500-stock index edged up to a five-year high on Friday, extending a rally that started in January.
The S. P. 500 rose 8.54 points, to 1,517.93, closing up 0.3 percent for the week. The index is at its highest point since November 2007 and has advanced for six weeks, the longest streak of gains since August.
The Dow Jones industrial average rose 48.92 points, or 0.35 percent, to 13,992.97.
The Dow had its best January in almost two decades and closed above 14,000 on Feb. 1 for the first time since 2007. The index is up 6.78 percent so far this year; the S. P. 500 is up 6.43 percent.
The Nasdaq composite index climbed 28.74 points, or 0.91 percent, to 3,193.87.
A last-minute budget deal in Washington to avoid tax increases and spending cuts has helped to power the rally, on top of optimism about housing and gradual improvements in the jobs market.
The S. P. 500 finished the week higher despite logging its biggest daily decline in almost three months on Monday after worrying news from Europe. The index fell 1.2 percent that day as bond yields in Spain and Italy rose on concern that the region’s politicians would drag Europe back into crisis. The European Central Bank president, Mario Draghi, made cautious comments about the region’s economy on Thursday, which also weighed on markets.
“Everybody seems to be saying this market needs to correct,” said Robert Pavlik, chief market strategist at Banyan Partners. “Nobody wants to be in it, but nobody wants to be out of it.”
Largely positive corporate earnings reports and a report that showed that the United States trade deficit narrowed sharply in December provided more fuel for the market’s advance on Friday.
The trade deficit fell nearly 21 percent in December from November, to $38.5 billion, the smallest point in nearly three years, as exports rose while oil imports plummeted. The smaller trade gap means the economy most likely performed better in the final three months of last year than first reported last week.
“The trade balance was surprisingly very good,” said Philip J. Orlando, chief market strategist at Federated Investors.
The government estimated that the economy contracted at an annual rate of 0.1 percent in the last three months of 2012. Mr. Orlando said that may now be revised to growth of 0.5 percent.
Shares of LinkedIn, the online professional networking service, jumped $26.39, or 21.27 percent, to $150.48, after the company reported fourth-quarter results late on Thursday that beat analysts’ forecasts.
AOL shares soared $2.31, or 7.35 percent, to $33.72, after the company said its quarterly revenue grew for the first time in eight years, helped by strength in worldwide advertising.
Analysts are expecting earnings for the fourth quarter of 2012 to rise 6.5 percent for S. P. 500 companies, according to data from SP Capital IQ. That is an increase from the 2.4 percent growth rate recorded for the preceding quarter.
Stocks have benefited as investors poured a net $4.1 billion into stock mutual funds since the start of the year, according to data provided by Lipper.
“I’m very encouraged by the fact that, finally, for the first time in many years, individual investors seem to be participating in this,” said David Kelly, chief global strategist at J. P. Morgan Funds.
The Treasury’s benchmark 10-year note rose 2/32, to 97 4/32, and the yield fell to 1.95 percent from 1.96 percent late on Thursday.
Trading volume was light as Wall Street braced for a large winter storm. Up to two feet of snow was forecast along the densely populated Interstate 95 corridor from the New York City area to Boston and beyond.
Article source: http://www.nytimes.com/2013/02/09/business/daily-stock-market-activity.html?partner=rss&emc=rss