Eases Recession Fears : Dow Up 21.72, Buoyed by Trade Deficit News

Wall Street closed higher Friday as the U.S. trade deficit declined further from the record peak of October, reducing the fear of recession with it.

The Dow Jones industrial index closed 21.72 points higher at 1,983.26--up more than 80 points from the 1,895.72 at the end of Monday’s losing session and a gain of 72.78 points for the week.

Advancing stocks outnumbered decliners by about 5 to 3 among New York Stock Exchange-listed issues, with 937 up, 556 down and 473 unchanged.

Big Board volume totaled 177.19 million shares, down from Thursday’s 200.76 million.

Before the market opened the Commerce Department reported that the nation’s trade deficit narrowed to $12.20 billion in December from $13.22 billion the month before.

Traders Encouraged

The figure came in at the low end of analysts’ estimates, and loaned support to the growing belief that the international trade situation is improving. American exports set a record for the second straight month.

But analysts said traders in the stock and bond markets did not see the news as purely positive.

Given the strength it showed in U.S. manufacturing, they said, the chances seemed less that the Federal Reserve might soon relax its credit policy further. Interest rates rose and prices declined in the credit markets.

Still, traders were encouraged that the trade figure was moving in the right direction with aid from record exports by U.S. producers, erasing recession fears that cropped up after the October stock market crash.

Concern over a slowdown in the economy was prompted by recent reports of a surge in business inventories and slackening job growth. But the strong export orders seen in Friday’s trade report indicated that orders from abroad may keep the economy on track, analysts said.

“You’ve had a nice rally the last few days. The improved trade figure was probably already accounted for,” said Hildegard Zagorski of Prudential-Bache Securities.

“We’re going to see the market go past 2,000 in the next few days,” she said. “There’s more confidence around and a lot of cash on the sidelines.”

Another apparent drag on the markets was the Labor Department’s report that the producer price index of finished goods rose 0.4% in January, after falling about the same amount in December.

As they had on last month’s trade report, stocks registered just about all their gains in the first half hour of trading and then spent the rest of the session drifting in a narrow range.

Gainers among the blue chips included International Business Machines, up 3/4 at 112; Ford Motor, up 1/2 at 43 3/8; Eastman Kodak, up 7/8 at 42 3/4, and Exxon, up at 40 1/2.

General Motors, benefiting from upbeat appraisals of its earnings report early in the week, rose 1 1/2 to 67 1/8.

United Inns paced the day’s percentage gainers, jumping 7 3/8 to 26 1/2. The company said it retained an investment banking firm to advise it on potential takeover offers that “have or might be made.”

MCA climbed 5 to 45. The company said it was notified by Donald Trump, the real estate developer and financier, that he had acquired a block of MCA stock and might increase his stake to as much as 24.9%.

Modest Trading Abroad

The Wilshire index of 5,000 equities closed at 2,540.595, up 15.742 or 0.62 from the preceding trading day.

The NYSE’s composite index of all its listed common stocks added .87 to 144.86.

Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 201.46 million shares.

Standard & Poor’s index of 400 industrials rose 2.22 to 296.07, and S&P;’s 500-stock composite index was up 1.68 at 257.63.

The NASDAQ composite index for the over-the-counter market gained 2.23 to 353.27. At the American Stock Exchange, the market value index closed at 277.00, up 2.60.

In foreign trading, stock prices rose only moderately in London despite news of an improvement in the U.S. trade deficit.

The Financial Times 100-share index was up 4.2 points at 1,734.0 at the close.

In Tokyo, share prices closed higher in modest trading Friday on speculation that U.S. trade data for December to be released later in the day would show a narrower deficit than November, brokers said.

The Nikkei 225-share index gained 210.06 points to close at 23,981.94, just off the day’s high.