FILE – In this file photo taken Dec. 7, 2010, specialist Patrick Murphy, foreground left, directs trading in shares of Citigroup at the close of trading on the floor of the New York Stock Exchange. (AP Photo/Richard Drew, file)
NEW YORK (AP) — Brightening prospects for passage of a compromise tax package and an encouraging trade report has stocks edging higher.
The government reported Friday morning that the U.S. trade deficit fell to its lowest level in nine months in October. Growing demand for American goods overseas pushed exports to their highest level in more than two years. The trade deficit narrowed to $38.7 billion, 13.2 percent below September’s deficit of $44.6 billion.
In afternoon trading, the Dow Jones industrial average rose 13, or 0.1 percent, to 11,382.62. The Standard Poor’s 500 index rose 3.5, or 0.3 percent, to 1,236.50. The Nasdaq composite index rose 10, or 0.4 percent, to 2,626.74.
It appeared that the Senate would approve legislation aimed at avoiding sweeping tax increases Jan. 1 after negotiators added a few sweeteners to promote ethanol and other forms of alternative energy. A test vote was set for Monday.
House Democrats, however, balked at the proposal to extend tax cuts, voting in a closed-door meeting Thursday not to allow the package to reach the floor for a vote without changes to scale back tax cuts for the rich.
Tom di Galoma, head of fixed income trading at Guggenheim Partners in New York, said traders see passage of the deal as nearly inevitable. Their view is that it’s unthinkable that Democrats would ultimately prevent the measure from going through. “To stimulate the economy, it really has to be done,” he said. “The last thing you want to do is raise taxes in the middle of a recession.”
On the off chance it failed, di Galoma said, stocks would probably lose the gains made over the past two weeks. Treasurys would jump, causing their yields to plummet.
Markets were trading flat in Europe and Asia, with concerns China’s decision to tighten bank lending could dampen global growth.
Of the 30 stocks in the Dow index, 16 rose, led by General Electric Co. GE rose 1.6 percent to $17.41.
Healthcare stocks are leading the SP 500 index higher. Shares in Tenet Healthcare Corp. rose 54 percent to $6.60. Hospital operator Community Health has offered to buy Tenet for $3 billion in cash and stock. The merger would create the country’s second-largest hospital chain.