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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Stocks close in strong rally

MIAMI - JANUARY 13:  Cargo ships unload their ...

Image by Getty Images via Daylife

UPDATED at 4:37 p.m.:

Stocks rallied to a strong close and recouped all the losses that resulted from last week's flash crash.

The Dow closed up 1.4 percent at 10,896.91.

The broader S&P 500 closed up 1.4 percent at 1,171.67. The tech-heavy Nasdaq closed up 2.1 percent at 2,425.02.

The Dow and the S&P 500 are now up a little less than 4 percent for the year and the Nasdaq is up a little more than 4 percent year-to-date.

Stocks rally despite surge in April budget deficit

2:41 p.m.: A nice bump at opening has turned into a full-fledged stock rally on Wall Street.

With a little less than 90 minutes left in the trading day, the Dow is up 1.2 percent.

The broader S&P 500 is up 1.2 percent and the tech-heavy Nasdaq is up 1.9 percent.

In economic news today, the government reported that the April U.S. budget deficit was the highest in history, at $82.7 billion, twice what many forecasters were predicting. Through the first seven months of the fiscal year, the budget deficit is $799 billion. April income was 8 percent lower than it was in April of last year and spending was 14 percent higher compared to the same time.

In sign of recovery, U.S. trade gap widens, pushes stocks up

9:58 a.m.: Stocks are up this morning following news that the U.S. trade gap has widened, a sign of economic rebound.

In the first 20 minutes of trading, the Dow is up half of 1 percent.

The broader S&P 500 is up half of 1 percent and the tech-heavy Nasdaq is up seven-tenths of 1 percent.

The U.S. trade gap grew to a 15-month high in March, the Commerce Department said this morning, swelling to $40.4 billion. Both imports and exports were up.

The imports side was largely a function of rising crude prices, as oil rose steadily throughout the quarter. Imports were up 3.1 percent in March to $188 billion. On the outgoing side, exports rose 3.2 percent to $147 billion, which was the highest level since October 2008.

A healthy U.S. economy can live with a trade gap, which is what it's referred to here. I won't call it a "trade deficit," as you often hear, because that implies the U.S. should be a net exporter all the time and that's simply not the case, not in a modern economy.

The U.S. does face headwinds on the export front, however. The biggest recipient of U.S. exports is Europe, which as you know is facing all kinds of problems now. Even before this bubonic plague of debt swept across Europe, the Continent was expecting only a 1 percent gain in GDP for all of 2010. Europeans may not be buying a lot this year.

Here's an alternative view on the trade gap from Peter Schiff, president of Euro Capital, libertarian and Connecticut Senate candidate:

"The news today on U.S. trade deficit expansion is being widely reported as a sign of global economic recovery when in fact it is a signal that significant problems lay ahead. The reason that the credit crisis developed in the first place was that the global economic model in place for much of the last decade, whereby the United States borrowed from abroad to purchase imported consumer products, was unsustainable. The recession of 2008 and 2009 had begun the hard work of forcing trade balances back into alignment. However that painful, but salutary, process was short-circuited by massive U.S. fiscal and monetary stimuli which encouraged Americans to spend money they didn’t have. So after a few quarters of positive movement, whereby the U.S. trade deficit declined sharply, we have reversed course back to economic unsustainability."

Follow me on Twitter at @theticker.

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By Frank Ahrens  |  May 12, 2010; 4:37 PM ET
Categories:  The Ticker , Wall Street  | Tags: Balance of trade, Business, Economy of the United States, Export, International trade, Twitter, United States, United States Department of Commerce  
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Spending a trillion and not buying much except for more debt. Buy a lot, we're building a new house. More debt and more rooms. I want a 3 car garage. It looks like a long drawn out recovery. Buy pictures for the new walls. You gotta love it.

Posted by: tossnokia | May 12, 2010 11:37 AM | Report abuse


The Republicans must be devastated.

They wanted so badly for America to fail.

Posted by: lindalovejones | May 12, 2010 11:40 AM | Report abuse

Congratulations are in order for Obama, Reid and Pelosi for their milestone achievement of largest monthly deficit. Just like the Greeks we got hit with a Trojan horse when the Dems gave the US Obama. Good to see unemployment is "down" to 9.9%. That plus the Obama deficit bodes well for the recovery alluded to by ljones. By the way no one wants to see America fail...just the Obama policies that are driving our economy over the cliff.

Posted by: bz11 | May 12, 2010 4:41 PM | Report abuse

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