Dow Up 13.39 on News of Lower Trade Deficit

Wall Street stocks closed with strong gains today, extending their winning streak to three days on heavy futures-related buying and news of a narrowing U.S. trade deficit.

The Dow Jones Industrial Average rose 13.39 to 2,324.82 and rose 38.75 for the week.

New York Stock Exchange volume was 159,520,000 shares compared to 177,450,000 shares Thursday.

Advancing issues led declines by almost 2-1.

Steady futures-related buying occurred prior to the “triple witching hour” at the end of the day--one of four Fridays during the year when stock index futures, index options and stock options expire.

Shares also rose after a report on the U.S. merchandise trade deficit was within analysts’ expectations. The nation’s trade gap narrowed to $11.89 billion in December from $12.22 billion in November, the government reported in the morning.

Analysts said the figures raised some concern that the Federal Reserve might be inclined to tighten credit further.

But they also noted a general sense of relief that the trade data didn’t contain any unexpected bad news, as some talk on the Street Thursday had suggested it might.

Bond prices were narrowly mixed today in quiet trading after the government reported a widely expected decline in the nation’s trade deficit.

The Treasury’s benchmark 30-year bond was off 3/32 point, or about $1 per $1,000 face amount, at midday. Its yield, which moves in the opposite direction from its price, rose to 9.06% from 9.05% late Thursday.

Corporate bonds prices edged up, however.

The Commerce Department said the December trade deficit declined to $11.9 billion from a revised November figure of $12.2 billion. The November shortfall was originally reported at $12.5 billion.

Economist Robert Chandross of Lloyds Bank in New York said the bond market shrugged off the slight improvement in the trade picture because “it was close to what was expected.”

He said trading was subdued as traders prepared for a three-day holiday weekend that will keep the U.S. credit markets closed on Monday.

“The market is still licking its wounds,” Chandross said, referring to the steep decline that has sent some 30-year-bond prices down by about 3 points over the past seven sessions.

In the secondary market for Treasury bonds, prices of short-term governments slipped 1/16 point, intermediate maturities were off 3/32 point and long-term issues fell 1/8 point, according to Telerate Inc., the financial information service.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was unavailable.

Industrial Bonds Up

In corporate trading, industrials were up. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.57 to 297.75.

Yields on three-month Treasury bills rose to 8.78% as the discount rose 2 basis points to 8.48%. Yields on six-month bills rose to 9.05% as the discount rose 1 basis point to 8.55%. Yields on one-year bills rose to 9.27% as the discount rose 5 basis to 8.56%.

A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, which is paid at maturity.

The federal funds rate, the interest on overnight loans between banks, was quoted at 9 5/16%, down from 9 3/8% late Thursday.